Dividends and earning approach to value a share

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Reference no: EM131205924

Use the Dividends and Earning approach to value a share of Merck (MRK) stock. Your investment horizon is 5 years. You expect to earn dividends according to the chart below. Your forecast of sales and profit margins leads you to expect to be able to sell the shares in 5 years for $60. A CAPM analysis gives a required return of 10%. [You may check this answer by e-mailing me by Saturday].

Year       Expected Dividend

1              $1.46

2              $1.58

3              $1.70

4              $1.86

5              $2.02

Reference no: EM131205924

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