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Problems 1-24
Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-In" be installed in Excel. To install these, click on the Office button then "Excel Options," "Add-Ins" and select "Go." Check "Analyis ToolPak" and "Solver Add-In," then click "OK."
require that
Chapter 8
Question 1 Input area:
1.95 6% 11% 15
Output area:
Price
99.07
Chapter 8
Question 2 Input area:
$ $
2.10 5% 48.00
Output area:
Required return
9.38%
Chapter 8
Question 3 Input area:
$ $
2.10 5% 48.00
Output area:
4.38% 5.00%
Chapter 8
Question 4 Input area:
Output area:
Price
42.22
Chapter 8
Question 5 Input area:
5.2% 6.3%
Output area:
Required return
11.50%
Chapter 8
Question 6 Input area:
47.00 11.0%
Output area:
$ $
2.59 2.45
Chapter 8
Question 7 Input area:
9.75 11 10.0%
Output area:
Share price
63.33
Chapter 8
Question 8 Input area:
$ $
5.50 108.00
Output area:
Required return
5.09%
Chapter 8
Question 9 Input area:
Dividend paid Dividend growth rate Red required return Yellow required return Blue required return
Output area:
$ $ $
Chapter 8
Question 10 Input area:
Dividend paid Dividend growth rate Required return for first 3 years Required return for second 3 years Final required return
Output area:
Stock price at beginning of final period Stock price at beginning of second period Current stock price
Chapter 8
Question 11 Input area:
Future dividend Years until first dividend Dividend growth rate Required return
10.00 10 5% 14%
Output area:
$ $
111.11 34.17
Chapter 8
Question 12 Input area:
$ $
Output area:
Chapter 8
Question 13 Input area:
Dividend one Dividend two Dividend three Dividend four Dividend growth rate Required return
$ $ $ $
Output area:
$ $
30.00 40.09
Chapter 8
Question 14 Input area:
Dividend growth rate - period 1 Dividend growth rate - period 2 Required return Dividend
Output area:
$ $
59.88 48.70
Chapter 8
Question 15 Input area:
Share price Required return Initial dividend growth rate Second growth rate Final growth rate Initial # of years Second # of years
Output area:
X D0 X D0
Chapter 8
Question 16 Input area:
Output area:
Price
64.78
Chapter 8
Question 17 Input area:
Output area:
Current dividend
3.37
Chapter 8
Question 18 Input area:
20.00 20 6.4%
Output area:
312.50 96.15
Chapter 8
Question 19 Input area:
Dividend yield Dividend paid Change in price P/E ratio Commons shares outstanding
Output area:
Today's closing price Yesterday's closing price Earnings per share Net income
$ $ $ $
Chapter 8
Question 20 Input Area:
Dividend per share Initial growth rate Terminal growth rate # of years Required return
Output Area:
Stock price
69.55
Chapter 8
Question 21 Input Area:
Initial growth rate # of years Terminal growth rate Required return Dividend per share
Output Area:
Stock price
142.14
Chapter 8
Question 22 Input area:
Required return Most recent dividend Stock W dividend growth rate Stock X dividend growth rate Stock Y dividend growth rate Stock Z: Initial growth rate Initial # of years Final growth rate
20% 2 12%
Output area:
Dividend yields: Stock W price Dividend yield Capital gains yield Stock X price Dividend yield Capital gains yield Stock Y price Dividend yield Capital gains yield Stock Z price at final rate Stock Z current price Dividend yield Capital gains yield
55.00 9% 10% 23.68 19% 0% 17.81 24% -5% 103.68 82.33 6.6% 12.4%
$ $
In all cases, the required return is 19%, but this return is distributed
differently between current income and capital gains. High growth stocks have an appreciable capital gains component but a relatively small current income yield; conversely, mature, negativegrowth stocks provide a high current income but also price depreciation over time.
Chapter 8
Question 23 Input area:
Dividend paid Dividend growth rate Required return # of dividends per year
3.20 6% 12% 4
Output area:
a. Price b. Next four dividends Effective quarterly rate Effective first dividend Share price
$ $ $ $
Chapter 8
Questions 24, 25 Input area:
Required return Most recent dividend Year 1 dividend growth rate Year 2 dividend growth rate Year 3 dividend growth rate Year 4 dividend growth rate
Output area:
$ $
65.08 55.70
To solve problem #24, adjust the required return until the share price is equal to $63.82. Alternatively, you could use the "Solver" or "Goal Seek" functions.