Answered step by step
Verified Expert Solution
Question
1 Approved Answer
An ordinary share just paid a dividend of $1.20. The share is expected to pay annual dividends growing at 3% p.a. forever. Use the dividend
An ordinary share just paid a dividend of $1.20. The share is expected to pay annual dividends growing at 3% p.a. forever. Use the dividend discount model (DDM). If the rate of return is 11% p.a., which of the following can be used to find the share price in three years (only one correct answer)? (2 marks) 01.2*(1.11)^3/(0.11-0.03) 01.2/(0.11 -0.03) 01.2*(1.03)^3/(0.11-0.03) ONone of the options give the correct answer. 01.2*(1.11)^4/(0.11-0.03) 01.2*(1.03)^4/(0.11 -0.03) The share price in three years should be - (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56) (1 mark)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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