BUS 413 Lecture Notes - Lecture 2: Cash Flow, Net Present Value, Dividend Yield
20 Jan 2019
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The value of a share of stock is the pv of its expected future dividends. If the two investors expect the same future dividend stream, and they agree on the stock"s riskiness, then they should reach similar conclusions as to the stock"s value. Using a financial calculator enter: cf0 = 0, cf1 = 1. 91, cf2 = 2. 02, cf3 = 2. 14, cf4 = 2. 27, cf5 = 2. 41, and then enter i = 11 to solve for npv = . 85. D1 = sh d2 = sh d3 = 0. 80 d4 = 0. 96 d5 = 1. 15 d6 = 1. 20. Cf0 = 0; cf1 = 0; cf2 = 0; cf3 = 0. 8, cf4 = 0. 96, cf5 = 18. 29; i = 11% and calculate for npv = . 07. 8-20 the value of any asset is the present value of all future cash flows expected to be generated from the asset. Therefore, the pv of the remaining dividends is . 8800 . 5037 = . 3763.
