Need help with number 12

Average Growth Rate is: 14.3367%

Required Rate of Return is : 8.7%

**10.** A: Two-stage Non-constant DDM: Now let’s assume that for the next four years MSFT will grow its dividends at the growth rate you estimated in (10) above. **Assuming** D_{1} = $1.84, what are the dividends for: D_{2} ; D_{3} ; D_{4} ; and D_{5} if they grow at the rate estimated in (10) above? You may round each dividend estimate to the nearest penny. **(10 points)**

**11** B:Now, let’s assume that the dividend growth reverts back to a L-T sustainable growth rate = 6% after Year 5, that is from Year 6 to infinity. Estimate is D_{6} and P_{5}.

**(5 points)**

**12.** C:Use the Non-constant growth DDM from the Stock Video Lecture (at 17:20) to estimate the current value of MSFT using the dividend information you found in (11) & (12) above; assume a L-T sustainable growth rate of g = 6% after Year 5; and the required rate of return found in (8). [**HINT**: You already have all the data, not much work left here….find the sum of the PV of the cash flows.] Get Finance homework help today