CFA CFA Level 1 Multi-Period DDM with financial calculator

Multi-Period DDM with financial calculator

  • This topic has 4 replies, 3 voices, and was last updated Oct-18 by Pahtsan.
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    • mdlynch3
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      A stock that currently does not pay a dividend is expected to pay its first dividend of $1.00 five years from today. Thereafter, the dividend is expected to grow at an annual rate of 25% for the next three years and then grow at a constant rate of 5% per year thereafter. The required rate of return is 10.3%. The value of the stock today is closest to:

      A) $20.65.
      B) $22.72.
      C) $23.87.

      Could someone demonstrate how this can be solved with a financial calculator?

      Thanks!

    • riteshbadai
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      whats the answer

    • riteshbadai
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      what is the answer

    • mdlynch3
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      Answer is A

    • Pahtsan
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      I’m pretty sure that there isn’t a way, you just have to grind it out piece by piece. Correct me if I’m wrong, it would save a lot of time.

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