Question
It is now Dec 2020 and XYZ Limited has just paid a dividend of 2.00. Dividends will increase by 3% for the next four years
It is now Dec 2020 and XYZ Limited has just paid a dividend of 2.00. Dividends will increase by 3% for the next four years and then the growth rate will reduce to1.5%.
The risk-free rate is 2%, the expected market return is 6 % and the beta of XYZ Limited according to Bloomberg is 1.2
a) Calculate the expected return on a share in XYZ Limited
b) Calculate the intrinsic value of a share in XYZ Limited
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the expected return on a share in XYZ Limited we can use the Capital Asset Pricing Mod...
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Step: 2
Step: 3
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Modern Advanced Accounting In Canada
Authors: Hilton Murray, Herauf Darrell
7th Edition
1259066487, 978-1259066481
