Question
(c) For a rapidly growing Japanese company, the growth rate is projected to be 20% for the next two years and 10% for the
(c) For a rapidly growing Japanese company, the growth rate is projected to be 20% for the next two years and 10% for the following year. At the end of 3 years, the growth rate is expected to settle to 5% and remain so for the foreseeable future. The company has recently paid a dividend of 220 per share. Assume that the investors' required rate of return for the company's shares is 17%. i. ii. Determine the value of this company's share. [3 marks] If the market price of the share is 2,500 per share, is the share a desirable purchase? Explain. [1 mark]
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