Can I please get help calculating the highlighted question? Please provide all o

Question

Can I please get help calculating the highlighted question? Please provide all of the equations in excel.

what dividends do you expect for stock A over the next three years if you expect the dividend to grow at the rate of 3% per year for the next three years? In other words, calculate D1, D2, and D3. Note that DO $1.50 DO D1 D2 D3 1.50 1.55 1.59 1.64 Equation Assistance Annual Increase 0.03 Assume that stock A has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for three years, and then sell it for $27.05, what is the most you should pay for it? Supplemental Info Stock A: Stock Price Dividend Annual Return 2016 2015 2014 2013 2012 2011 $25.88 $22.93 $24.75 $16.13 $17.16 $11.44 $1.73 $1.59 $1.50 $1.43 $1.35 $1.28 20.41% -0.93% 62.7 4% 2.33% 61.80% Average Annual Return 29.27%

Explanation / Answer

Current Price of stock = D1/(1+r) + D2/(1+r)2 + D3/(1+r)3 + Price of Stock After 3 Years/( 1+r)3 =
1.55/(1+13%) + 1.59/(1+13%)2 + 1.64/(1+13%)3 + 27.05/( 1+13%)3 = 22.50

Using excel

Best of Luck. God Bless

A B C D Year Dividends Sales od share Total Cash flows 1 0 2 1 1.55 1.55 3 2 1.59 1.59 4 3 1.64 27.05 28.69 Discount rate 13% Current Price Using NPV $22.50 NPV(D4,D2:D4)

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