Question 8 6 pts Sunshine Company operates retail sunglass k

Question 8 6 pts Sunshine Company operates retail sunglass kiosks in shopping malls. Below is information related to the company. Required rate of return on equity (RE) is 8.5%. Assuming that steady-state growth in year 2022 and beyond will be 4% (ie, g). 2017 2018 2019 2020 2021 2022 Dividends to Common Equity (in thousands) s412 $4785636 $827 $950 $1.284 Common Shares Outstanding (in thousands) 1,512 Calculate the present value of continuing value of Sunshine at the start of 2022 using the perpetuity-with-growth model. $21.488.2 $1,403.28 $18.976 $2.512.23 ext s Previous

Solution

The perpetuity model formula clearly says that the dividend issues/discount rate - a growth rate

hence the answer for this would be the dividend issued for each year / Expected rate - a Growth rate

= D/r-g + d1/r-g + d2/r-g .....

Dividend should be calculated = divided by the total no of shares

= 412/ .085-.04 + D1/.085-.04 +....

hence the answer is 21,488.

Thank you