One propane distributor yields a preferred value of 60.00, common values of 34.63 and 41.21, and an implied 8.72 percent return across MT217's Unit 7 stock valuation exercise. Searches like "mt 217 unit 7 assignment example", "mt217 unit 7 sample" and "mt217 unit 7 example" land here.
What a finished MT217 Unit 7 stock valuation exercise looks like
Four problems on about four pages, each ending in a boxed value and a sentence of interpretation. The preferred stock pays 4.50 dollars a year forever and, at a required return of 7.5 percent, is worth 60.00. Common stock paid 1.84 last year; with growth of 3.5 percent the next dividend is 1.9044, and at a 9.0 percent required return the share is worth 34.63. A second scenario lets acquisitions lift dividends 10 percent a year for three years, to 2.0240, 2.2264 and 2.4490, before growth settles at 3.5 percent; the year-three price of 46.09 and the three dividends discount to 41.21. The fourth problem reverses direction, taking the 36.50 market price and solving for a required return of 8.72 percent, a 5.22 percent dividend yield plus growth.
How a MT217 Unit 7 example is structured
The problems run from simplest to most involved, so each builds on the one before. Preferred stock opens because it is a single division, and its paragraph names why a perpetuity fits: a fixed dividend with no maturity. The constant growth problem follows, with next year's dividend computed separately before the formula is used, since starting from last year's payment is the classic slip. The nonconstant problem lays out a timeline of the three high-growth dividends, computes the price at the end of year three with the growth formula, and discounts everything back, showing each present value. The final problem rearranges the growth formula to solve for the return. To finish, the three common stock figures are set against the market price, with a sentence on what each gap suggests about expectations.
A perpetuity for the preferred
A fixed 4.50 dividend with no maturity divided by 7.5 percent gives 60.00, the simplest valuation and the base for the rest.
Next year's dividend first
The constant growth model uses 1.9044, last year's 1.84 grown once, and the paper flags why using 1.84 would understate value.
Three fast years, then steady
Dividends at 10 percent growth are discounted individually, and the year-three price of 46.09 is discounted with them to reach 41.21.
The return the price implies
Rearranging the growth formula at a 36.50 price gives 8.72 percent, split into a 5.22 percent yield and 3.5 percent growth.
Three values, one market price
The closing paragraph sets 34.63 and 41.21 around 36.50 and reads the gap as the market pricing in some but not all of the faster growth.
Where marks go in MT217 Unit 7
Starting the growth model from last year's dividend instead of next year's is the error this unit is known for, and it understates value in every constant growth problem. In the nonconstant case, discounting the terminal price from year four instead of year three, or forgetting to discount it at all, produces answers far from any key. Required returns at or below the growth rate make the formula meaningless, and a paper that reports the resulting figure without comment loses ground. Many sections deduct for treating preferred dividends as growing. Answers that give a value with no comparison to the market price stop short of the interpretation the prompt usually wants. Carrying dividends to only two decimals mid-problem shifts the final value enough to draw a note from the grader.
Get a MT217 Unit 7 example written to your instructions
Share the Unit 7 problem set and the rubric, with any dividend, growth or required-return figures your instructor gave. Shares are valued step by step, next year's dividend computed first and every present value shown, and the results end up beside the market price. The opening sample is yours free, normally back inside 24-48h.
MT217 Unit 7 questions, answered
Why use next year's dividend in the growth model?
Because the formula values the stream of future dividends, and the first one a buyer today will receive is next year's. Using last year's payment values a dividend already paid. In the sample, 1.84 grown by 3.5 percent becomes 1.9044, and dividing that by the 5.5-point gap between return and growth gives 34.63.
What if growth exceeds the required return?
Then the constant growth formula breaks, giving a negative or infinite value. That usually means the high growth is temporary, and a nonconstant model is needed, with fast growth for a few years followed by a sustainable rate below the required return. The sample's third problem is built that way for exactly this reason.
Does the exercise say whether to buy the stock?
No. It computes values under stated assumptions and compares them with the price to show what the market appears to expect. Whether anyone should buy a share depends on circumstances well beyond a course exercise. Finance assignments at this level typically ask for the valuation and its interpretation, and the sample stays within that boundary.