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Leduc Industries is a major engineering company in Winnipeg. It is expected to pay a dividend of $2.30 in one years time. The companys earnings
Leduc Industries is a major engineering company in Winnipeg. It is expected to pay a dividend of $2.30 in one years time. The companys earnings and dividends are expected to grow at 5% a year for the foreseeable future.
a. If the current price of Leducs shares is $25 what is the required rate of return for investors?
b. If Leduc expects zero growth in the dividend and $2.30 is the future level of the dividend what should be the value of Leducs shares?
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