Question

Ivanhoe Corp. is a fast-growing company whose management expects it to grow at a rate of 23 percent over the next two years and then to slow to a growth rate of 17 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.) D1: $______

What is the dividend for the 2nd year? (Round answer to 3 decimal places, e.g. 15.250.) D2: $______

What is the dividend for the 3rd year? (Round answer to 3 decimal places, e.g. 15.250.) D3: $______

What is the dividend for the 4th year? (Round answer to 3 decimal places, e.g. 15.250.) D4: $______

What is the dividend for the 5th year? (Round answer to 3 decimal places, e.g. 15.250.) D5: $______

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.) Present Value: $______

Answer 1

Dividend	Year	Formula	Amount	PVF @14%	PV @14%
D0	0		2.15	1.00	2.15
D1	1	=2.15*123%	2.64	0.88	2.32
D2	2	=2.64*123%	3.25	0.77	2.50
D3	3	=3.25*117%	3.81	0.67	2.57
D4	4	=3.81*117%	4.45	0.59	2.64
D5	5	=4.45*117%	5.21	0.52	2.71