Derriford (Engineering) plc is expected to announce a dividend of 0.40 per share for the forthcoming year.
Question:
Derriford (Engineering) plc is expected to announce a dividend of £0.40 per share for the forthcoming year. The cost of equity is estimated at 12 per cent. What is the estimated market value of an ordinary share assuming an annual growth rate in dividends of:
(a) 10 per cent and
(b) 7 per cent?
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Using the formula Thus a 3 per cent ...View the full answer
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