Question
A share is expected to pay a dividend of Shs 30/= in one years time. Thereafter, dividend growth is expected to be 5% per annum
A share is expected to pay a dividend of Shs 30/= in one years’ time. Thereafter, dividend growth is expected to be 5% per annum for two years and 2% per annum subsequently. If the market capitalization rate is 16% per annum, what is the value of the share?
Select one:
A. Shs 236.30
B. Shs 200.60
C. Shs 151.40
D. Shs 214.30
Step by Step Solution
3.39 Rating (158 Votes )
There are 3 Steps involved in it
Step: 1
Dividend in 1 year Shs 30 Dividend growth for next 2 ...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Principles of Corporate Finance
Authors: Richard A. Brealey, Stewart C. Myers
7th edition
72869461, 72467665, 9780072467666, 978-0072869460
