Reference no: EM133049014
Question - The following table contains the six-year EPS history for Corporation X. The dividend payout ratio is 30%.
|
Year
|
EPS
|
|
2013
|
0.75
|
|
2014
|
0.78
|
|
2015
|
0.81
|
|
2016
|
0.82
|
|
2017
|
0.85
|
|
2018
|
0.90
|
Required -
1) What is the dividend amount paid in 2013?
2) What is the compound growth rate (CAGR) of the dividend based on the dividend paid from 2013 - 2018?
3) Assume dividend is growing at the compound growth rate of the dividend in 2019, what is the dividend per share in 2019?
4) Use the dividend constant growth model, calculate the intrinsic value of the stock using a 10% required rate of return.
5) How does the calculated intrinsic value compare to the current stock price of $5? Use IF statement.
6) Use the Goal Seek or Solver option to find the dividend growth rate which will make the stock fair-valued (i.e., current stock price = intrinsic value).
7) Setup Two-way Data Table to illustrate the impact on the intrinsic value if both the required rate of return (from 8% to 11% at the increment of 0.5%) and 2019 dividend (from $0.1 to $0.5 at the increment of $0.05) change.