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Net Present Value (stock valuation)

wholegrain
in Homework Help

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http://www.westga.edu/~rbest/finc3511/sampleprobs/chapter9/ch9p6/ch9p6.html

 

I get 81.53. I am off by like 3.

 

I calculated PV0

 

7.5(1.24)/(0.18-0.24) (1-(1.18/1.24)^2) = which gave me 14.64

 

then I calculated PV2 and converted it to PV0b

 

11.53(1.05)/(0.18-0.05)/1.18^2

 

which gave me 66.88

I added them 66.88+14.64

 

which gave me 81.53

 

I used the formula for growing perpetuity and growing annuity

I have not watched video.

 

7.5(1.24)/(0.18-0.24) (1-(1.18/1.24)^2) = which gave me 14.64

I am getting -14.637

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