Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. A company has just paid its annual dividend of $3.95 yesterday, and it is unlikely to change the amount paid out in future years.

1. A company has just paid its annual dividend of $3.95 yesterday, and it is unlikely to change the amount paid out in future years. If the required rate of return is 18 percent p.a., what is the share worth today? (to the nearest cent; dont include $ sign)

2.

A company has just paid its first dividend of $3.78. Next year's dividend is forecast to grow by 5 percent, followed by another 5 per cent growth in year two. From year three onwards dividends are expected to grow by 3.3 percent per annum, indefinitely. Investors require a rate of return of 16 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

Select one:

a. $31.71

b. $28.61

c. $13.76

d. $15.65

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business Finance

Authors: Michael Connolly

1st Edition

0415701538, 9780415701532

More Books

Students also viewed these Finance questions

Question

What does stickiest refer to in regard to social media

Answered: 1 week ago