The first component of value is the present value of the
expecteddividendsduringthehigh-growthperiod.Basedon
thecurrentearningspershare($11.03),theexpectedgrowth
rate (16.82%), and the expected dividend payout ratio
(9.07%),theexpecteddividendscanbe computedfor each
year in the high-growth period:
Thepresentvalue iscomputed using thecost ofequity of
9.3%for thehigh-growth period.Thepresentvalueof the
dividends can also be computed in shorthand using the
followingcomputation(basedoncurrentdividendspershare
of $1.00):
Theprice(terminalvalue)attheendofthehigh-growthphase
(endofyear5)canbeestimatedusingtheconstantgrowth
model.