Help wanted with Finance worksheet

Sheet

1

Unit

6

D

istinguished Scholar Template, Sample Data

Risk Free rate,

Rf

=

4

.5%

Market Return rate, Rm = 1

3

% Beta or risk,

β = .8

0

Dividend today,

$ 1.60 Dividend 6 years ago $ 1.

2

5 Begin by calculating required return or RE (also referred to as r) Steps Numbers

1

a %

1)   Let’s find (r) = Rf + ( β * [Rm

–

Rf] ) [Comes from the CA

P

M model]

.045 + .80 (.13-.045) Order of mathametical ops .045 +[ (.80) * (.085)] .045 + [.068] = .113 0.113 2

a % 2)  Next, find g or growth, a function of fx RATE [Nper, PV, and FV ] 4.20% 3

a $ 3)  D1 (1.60 x g) is based on today’s dividend times g (growth rate) $ 1.67 4 a $

4)     Stock price model is $ 1.67 $ 1.67

$ 23.52 PRICE (0.113-.042) 0.071

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D
P

rg

=
–