problem sets 2

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FCF_11th_edition_Chapter_08_Problem_6_template.xlsx
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Chapter 8

Chapter 8
Problems 4, 6, 7, 32
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-In" be installed in Excel.
To install these, click on the Office button
then "Excel Options," "Add-Ins" and select
"Go." Check "Analyis ToolPak" and
"Solver Add-In," then click "OK."

#4

Chapter 8
Question 4
Input area:
Dividend paid
Dividend growth rate
Required return
Output area:
Price ERROR:#DIV/0!

#6

Chapter 8
Question 6
Input area:
Stock price
Required return
Output area:
Next year's dividend $ - 0
Current dividend $ - 0

#7

Chapter 8
Question 7
Input area:
Current dividend
Years until dividend ceases
Required return
Output area:
Share price $ - 0

#32

Chapter 8
Question 32
Input area:
Required return
Most recent dividend
Stock W dividend growth rate
Stock X dividend growth rate
Stock Y dividend growth rate
Stock Z:
Initial growth rate
Initial # of years
Final growth rate
Output area:
Dividend yields:
Stock W price ERROR:#DIV/0!
Dividend yield ERROR:#DIV/0!
Capital gains yield ERROR:#DIV/0!
Stock X price ERROR:#DIV/0!
Dividend yield ERROR:#DIV/0!
Capital gains yield ERROR:#DIV/0!
Stock Y price ERROR:#DIV/0!
Dividend yield ERROR:#DIV/0!
Capital gains yield ERROR:#DIV/0!
Stock Z price at final rate ERROR:#DIV/0!
Stock Z current price ERROR:#DIV/0!
Dividend yield ERROR:#DIV/0!
Capital gains yield ERROR:#DIV/0!
In all cases, the required return is 0%, but this return is distributed
differently between current income and capital gains. High growth
stocks have an appreciable capital gains component but a
relatively small current income yield; conversely, mature, negative-
growth stocks provide a high current income but also price
depreciation over time.