Has anyone else noticed the error with the terminal value of the DDM model for this example?
The dividend is 5.25 which is 2016 dividend of 5.20 grown by 1% (the dividend growth rate into perpetuity).
Yet, the 5.25 is divided by (0.09 - 0.02) to arrivea t $75.06??
Shouldn’t 5.25 by divided by (0.09 - 0.01)?? The required return minus the dividend perpetuity growth rate?
To arrive at a terminal value of $65.675 not the Schweser answer of $75.06