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11 December, 19:27

Consider buying Coca-Cola stock. Calculate the fundamental value of Coca-Cola using the following information. Quarterly dividend of $0.33/share (assume a dividend was just paid) Coca-Cola plans to keep the dividend fixed for the next 4quarters Projected price in1 2-months = $48 Quarterly discount rate of 2%

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  1. 11 December, 19:36
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    Present Vlaue of the stock = $45.60

    Explanation:

    The question is primarily to determine the present value of the investment in Coc-Cola Stock based on the information provided as follows

    The Stock Price ast the end = $48 (this will be added at the end with the last dividend)

    The Quarterly dividend per year = $0.3

    The period = 4 quarters (in a 12 month period) = n

    Discount rate = 2% = r

    The present value = Dividend per share / (1+r) ∧1 + Dividend per share / (1+r) ∧2 + Dividend per share / (1+r) ∧3 + Stock Price given + Dividend per share / (1+r) ∧4

    = 0.33 / 1.02∧1 + 0.33 / 1.02∧2 + 0.33 / 1.02∧3 + (48 + 0.33) / 1.02∧4

    = $45.60
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