Sandhill Corp. is a fast-growing company whose management expects it to grow at a rate of...

Sandhill Corp. is a fast-growing company whose management expects it to grow at a rate of 29 percent over the next two years and then to slow to a growth rate of 12 percent for the following three years. If the last dividend paid by the company was $2.15.

What is the dividend for the 1st year? (Round answer to 3 decimal places, e.g. 15.250.)

What is the dividend for the 2nd year? (Round answer to 3 decimal places, e.g. 15.250.)

What is the dividend for the 3rd year? (Round answer to 3 decimal places, e.g. 15.250.)

What is the dividend for the 4th year? (Round answer to 3 decimal places, e.g. 15.250.)

What is the dividend for the 5th year? (Round answer to 3 decimal places, e.g. 15.250.)

Compute the present value of these dividends if the required rate of return is 14 percent. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)

Expert Solution

A	B	C	D	E	F	G	H
Year	Dividend	Growth rate	Growth rate	Dividend(D*E)	Calcualtions	Discounting factor@14%	Presnet value of Dividend(E*G)
0	D0	-	-	$ 2.150	-
1	D1	29%	1.29	$ 2.774	(2.15*1.29)	0.877	$ 2.433
2	D2	29%	1.29	$ 3.578	(2.774*1.29)	0.769	$ 2.753
3	D3	12%	1.12	$ 4.007	(3.578*1.12)	0.675	$ 2.705
4	D4	12%	1.12	$ 4.488	(4.007*1.12)	0.592	$ 2.657
5	D5	12%	1.12	$ 5.027	(4.488*1.12)	0.519	$ 2.611
							$ 13.159

dividend for the 1st year	$ 2.774
dividend for the 2nd year	$ 3.578
dividend for the 3rd year	$ 4.007
dividend for the 4th year	$ 4.488
dividend for the 5th year	$ 5.027

Present Value of dividends at required rate	$ 13.159

jeff jeffy answered 1 year ago

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