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1)Two-Phase Stock Valuation 2: The current dividend for Cisco Systems is $1

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1)Two-Phase Stock Valuation 2: The current dividend for Cisco Systems is $1. Suppose that analysts believe that Cisco's dividends for the next 5 years will grow at 15%. After the fifth year, analysts expect revenues (and dividends) for the company to grow at 5% forever. The required return for Cisco given its relevant risk is 18%. What should the current price for Cisco stock be? 1. Estimate value of Phase I dividends. 2. Estimate value of Phase II dividends. 3. Find PV of Phase II dividends.

2) Calculate the initial price of a price-weighted index that comprises both stocks A and B. 2. Calculate the final price of the same price-weighted index that comprises both stocks A and 3. Find the percentage change in the price weighted average of the two stocks 4 Calculate the final price of a market value weighted index that comprises A and B (assume that the initial price of the index is 100). 5. What is the percentage change of the value weighted index? Assume now that at t-0, stock B undergoes a 2 for 1 split (see new table below): Stock Initial Price (t-0) Final Price (1) Number of shares in millions) A 18 20 30 10 4 B 35 the price inted indey
Assume now that at t=0, stock B undergoes a 2 for 1 split (see new table below): Stock Initial Price (1-0) Final Price (t-1) Number of shares (in millions) A B 20 30 18 35 10 4 6- What is the new divisor for the price-weighted index? 7. Calculate the percentage change in the adjusted price-weighted index after the stock split. % 7. Calculate the percentage change in the value-weighted index after the stock split.