Answered step by step
Verified Expert Solution
Question
1 Approved Answer
d) You are trying to value WES shares today (end of 2022). Assume the current price of WES shares are $44.13. Assume that the total
d) You are trying to value WES shares today (end of 2022). Assume the current price of WES shares are $44.13. Assume that the total dividend paid by WES in 2021 was a lump sum. You also estimate that for the next two years dividends will grow respectively at 20% and 15% per year. After this (starting in time 3) you estimate dividends will grow at a constant rate of 1.5% forever. Assume that today the Australian 10 year government bond has a yield of 3.95%, the market risk premium is 6% and the beta of WES is 0.95. Based on this price would you purchase WES shares? Why or why not?
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