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(5 marks) Suppose that the last dividend paid on RBC share is $10. The dividends are expected to grow at a rapid growth rate of
(5 marks) Suppose that the last dividend paid on RBC share is $10. The dividends are expected to grow at a rapid growth rate of 8% over the next three yeas, and then at a constant growth rate of 5% thereafter. Your financial analyst managed to collect the following date on TD share a similar stock at the same risk class): Scenario Probability Rate od return on TD Bust -14% Boom 0.5 38% Answer the following questions: a. (4 marks) Determine the fundamental market price of RBC. b. (1 mark) Calculate the dividend yield. 0.5
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