2.Calculate the growth rate of Asset J dividends, we have to assume that future dividend payments will grow at a constant rate into the future forever. This constant rate can be estimated by calculating the average growth rate from the past dividends. Calculate Asset J’s dividend growth rate for the past 8 years. Let: Dj = $ .86, D = $2.00, n = 8. The equation for calculating the growth rate of dividends is the future value equation. where: Dj = PV, D8 = FV, n = time Growth Rate = I Calculate the growth rate: 3.Calculate Assets J’s theoretical value of the common stock price. The equation for the Dividend Growth Model is, V = (Current Dividend * (1 + Dividend Growth)) (Required Return – Dividend Growth) where: V = price of the common stock, Current Dividend = Most recently paid dividend, Required return on common stock = CAPM Dividend Growth = Growth Rate of Dividend 4.This time, calculate the growth rate of Asset J dividends over the past five years if the dividend gr
ew by the following: Let: D = $1.42, D = $2.00, n = 5. The equation for calculating the growth rate of dividends is the future value equation. where: Dj = PV, D8 = FV, n = time Growth Rate = I 5.Use the new growth rate of Asset J’s dividend in question four and calculate the theoretical value of the common stock of Asset J. Assume Asset J’s required return on the common stock (CAPM) remained the same as in question 1. Use the same Dividend Growth Model equation as in question 3 to find the new theoretical value of the common stock of Asset J. V = 6.The required rate of return calculation has an enormous effect on the stock’s price using these types of models. If we assume that Nations Bank’s required rate of return on its common stock (CAPM) is 12% instead of 13%, what would the Constant Dividend Growth Model Price yield? You need to plug in the dividend growth rates from appropriate results above. V = 7.Is there a significant difference? Please explain your answer.