The return of ABC Company at present is 21%. This is assumed to continue for the...
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The return of ABC Company at present is 21%. This is assumed to continue for the next five years and after that it is assumed to have a growth rate of 10% indefinitely. The dividend paid for the year 1997-1998 is 32 per cent. The required rate of return is 20 per cent and the present price is Ksh.57. What is the estimated price according to the two stage model? (5 marks) The return of ABC Company at present is 21%. This is assumed to continue for the next five years and after that it is assumed to have a growth rate of 10% indefinitely. The dividend paid for the year 1997-1998 is 32 per cent. The required rate of return is 20 per cent and the present price is Ksh.57. What is the estimated price according to the two stage model? (5 marks)
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