# Estimating the return on the given stock

You have the following information for Starbucks: Current EPS is $1.79. The current dividend is $.68 per share. The return on equity is 24%. The current price is $49.22. Hint: Get the payout rate.

a. Use the dividend discount model (also known as the constant growth model) to estimate the return for Starbucks.

b. Assuming your answer to part a. is correct, estimate the present value of the growth opportunities (PVGO).

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a. Use the dividend discount model (also known as the constant growth model) to estimate the return for ...

#### Solution Summary

Solution describes the steps to estimate the return on the given stock. It also calculates the present value of growth opportunities. Calculations are carried out in Excel format.