Question
Hanson limited paid recently a dividend of Ksh 10.00 per share. Hansen has a beta coefficient of 0.83, an equity risk premium of 9.45%.
Hanson limited paid recently a dividend of Ksh 10.00 per share. Hansen has a beta coefficient of 0.83, an equity risk premium of 9.45%. The risk-free rate of return is 4.65 percent (Hint. CAPM MODEL). An analyst has estimated that Hanson's dividend per share will grow initially at a constant rate of 20 percent for two years and then decline linearly to 5 percent over a 10-year period. Thereafter, growth rate will remain constant indefinitely. Compute the price of Hanson Limited share today Compute the price of Hanson Limited share, three years from now. 10 MARKS
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