Question
a)Delta Industries is a mature manufacturing firm. The company has just paid a $7 dividend, but management expects to increase the payout by 5% per
a)Delta Industries is a mature manufacturing firm. The company has just paid a $7 dividend, but management expects to increase the payout by 5% per year indefinitely. If you require a 10% growth on this share, what will you pay for the share today?
b)Ingloo Ltd pays a fixed dividend of $2.55 on its shares. What is the market value of a share of Ingloo preferred stock if the investors expected return is 8 percent?
c)Talia Ltd is expected to pay the following dividends over the next four years: $8, $13, $15 and $2.50. At the end of 4 years, the share price is expected to trade at $50. If the required rate of return is 11%, what is the current share price?
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