Sheet1

Implied Risk Premium Calculator

Enter level of the index = 970.43
Enter current dividend yield = 1.60% (if you want, you can add stock buybacks
Enter expected growth rate in earnings for next 5 8.00%
Enter current long term bond rate = 5.92%
Enter risk premium = 5.50%
Enter expected growth rate in the long term = 5.92% (As a default, it is set equal to long term b

1 2 3
Expected Dividends = $ 16.76 $ 18.10 $ 19.55
Expected Terminal Value =
Present Value = $ 15.04 $ 14.58 $ 14.13
Intrinsic Value of Index = $ 326.49

Implied Risk Premium in current level of Index = 1.86% (Go under Tools and choose Solver: Se

1 2 3
Expected Dividends = $ 16.76 $ 18.10 $ 19.55
Expected Terminal Value =
Present Value = $ 15.55 $ 15.58 $ 15.61
Intrinsic Value of Index = $ 970.43

This is a picture of the solver option, with the inputs that I used (Do
Enter current level of index where you see 759.64.

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 Sheet1

want, you can add stock buybacks to this number)

default, it is set equal to long term bond rate)

4 5
$ 21.11 $ 22.80
$ 439.16
$ 13.70 $ 269.03

nder Tools and choose Solver: See below)

4 5
$ 21.11 $ 22.80
$ 1,297.92
$ 15.65 $ 908.03

, with the inputs that I used (Do not try to enter numbers in it).
ou see 759.64.

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