Assume the following information about a company: Past dividends 2015 $1.32 &nbsp

Assume the following information about a company:

Past dividends

2015 $1.32 Required return = 11%

2016 $1.44

2017 $1.54

2018 $1.66

2019 $1.76

Use the appropriate dividend model to place a value on this stock for 2020.

How do I set this up in excel?

Expert Solution

Year	Past Dividends
2,015	1.32
2,016	1.44
2,017	1.54
2,018	1.66
2,019	1.76

Calculate compounded annual growth rate of dividend from 2015 to 2019
Growth rate of dividend	7.46%	(1.76/1.32)^(1/4)

Equity Valuation for 2020 as per dividend discount model
Value of Equity	53.38	1.76*1.0746)/(.11-.0746)
Dividend at year 0 *(1+growth rate of dividend)/(Cost of equity - growth rate of dividend)

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