Question
Kramer Ltd last paid a dividend of $0.20 three years ago. Today the company announced they will resume paying dividends. The planned dividends are $0.40
Kramer Ltd last paid a dividend of $0.20 three years ago. Today the company announced they will resume paying dividends. The planned dividends are $0.40 in one year's time, $0.50 in two years' time, and thereafter dividends will increase by a constant rate of 3% p.a. indefinitely. If the required rate of return for Kramer is 11%, what is a fair price for one share today?
| a. | $6.25 | |
| b. | $5.63 | |
| c. | $6.19 | |
| d. | $0.36 | |
| e. | $5.99 |
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Professionals Handbook Of Financial Risk Management
Authors: Lev Borodovsky, Marc Lore
1st Edition
0750641118, 978-0750641111
