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Stock Expected Return

EXPECTED RETURN COMMON STOCK

INPUTS

LAST DIVIDEND $ 1.25 Dollar Amount

PRICE O STOCK $ !5."" Dollar Amount

EXPECTED #ROT% RATE &.""' D()*mal

OUTPUT

EXPECTED RETURN 11.+'

"' 11.+'

1'

2'

,'!'

5'

-'

'

+'

&'

1"'

11'

12'

1,'

1!'

15'

1-'

1'1+'

1&'

2"'

"' 5' 1"' 15' 2"'

"."'

2""."'

!""."'

-""."'

+""."'

1"""."'

12""."'

EXPECTED RETURNS AT DIERENT #ROT% RATES

#ROT% RATE

EXPECTED RETURN

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Stock Price - Zero Growth

PRICE O COMMON STOCK / 0ERO #ROT% MODEL

INPUTS

LAST DIVIDEND $ ,."" Dollar Amount

EXPECTED RETURN ROR -.""' Decimal

OUTPUT

PRICE O STOCK $ 5".""

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Stock Price - Constant Growth

PRICE O COMMON STOCK / CONSTANT #ROT% MODEL

INPUTS

LAST DIVIDEND $ 1.1 Dollar Amount

EXPECTED RETURN ROR 3 1,.-"'Decimal

#ROT% RATE 4 +.1"'Decimal

3 mut 6 4

OUTPUT

PRICE O STOCK $ 2,.""

&' $ 21.21"'

11'

12'

1,'

1!'

15'

1-'

1'

1+'

1&'

2"'

21'

5' ' &' 11' 1,' 15' 1' 1&' 21'

$/

$2.""

$!.""

$-.""

$+.""

$1".""

$12.""

STOCK PRICE AT DIERENT ROR

RE7UIRED RATE O RETURN

STOCK PRICE

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Stock Price - Variable Growth

PRICE O STOCK / VARIA8LE #ROT% MODEL

INPUTS

LAST 9EAR (.4.: 1&&- 1&&- 1&& 1&&+ 1&&& 2""" 2""1

LAST DIVIDEND $ 1.1

#ROT% RATE 4 ,".""' ,".""' ,".""' +.1"' +.1"' D()*mal

EXPECTED RETURN ROR 3 1,.-"'D()*mal

OUTPUT

DIVIDENDS $ 1.52 $ 1.&+ $ 2.5 $ 2.+ $ ,.""

PRICE $ 5!.-1

CAS% LOS $ 1.52 $ 1.&+ $ 2.5 $ 5.,&

PRESENT VALUE $,&."&

&' $,&."&

1"'

11'

12'

1,'

1!'15'

1-'

1'

1+'

1&'

2"'

21'

-' +' 1"' 12' 1!' 1-' 1+' 2"' 22'

$/

$2.""

$!.""

$-.""

$+.""

$1".""

$12.""

STOCK PRICE AT DIERENT ROR

RE7UIRED RATE O RETURN

PRICE O STOCK