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