Business, 04.07.2020 20:01 eemorales5100
As a Wealth Manager at Crimson Wealth, you are responsible for making recommendations to clients regarding common stocks. Your research on Core Inc, shows that dividend has been growing at a rate of 10% per year to the current dividend (D0) of $1.75 per share. The stock is now selling for $45 per share, and you believe that an appropriate discount rate of return for this stock is 15%A. If you expect that the dividend will grow at 10% rate into the foreseeable future, what is the highest price at which you would recommend purchasing this stock for your clients?Dividend at time 0 (Do) $1.75|Market Capitalization Rate (RRR) 15.00%Growth Rate of Div. (G) 10.0%Stock Price $45.00PO Using an IF statement to determine your answer will earn a bonus point: Overvalued/Undervalued B. Supposed now that you believe that Core's new computer chip will rival Pentel's, resulting in higher growth in the near future. Your new estimate is for a 5 year period of 30% annual growth followed by a return to the historical growth rate of 10%. Under these new assumptions, what is the value of the stock using the two stage dividend growth model? Bonus PointTime Growth Rate Div PV PV at time12345678910Growth rate of Dividend Beginning Period Growth Rate1 30.00%6 10.00%Po Over/Undervalued Bonus point
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