Question
May I ask how can I calculate the 3 dividends to the present value in this question, please? The answer is C. A share will
May I ask how can I calculate the 3 dividends to the present value in this question, please? The answer is C.
A share will pay a dividend of $2.8 next year and $4.4 two years from now.The dividend will then grow at the rate of 2% forever,If the required rate of return is 8% p.a., what is the value of the share?(Hint:Calculate the present value of the next two dividends, calculate the value of the dividend three years from now, calculate the value of the growing perpetuity beginning with the dividend three years from now (as if the growing perpetuity began immediately), discount the value of the growing perpetuity the appropriate number of years to get its value in Year 0, and then add the three present value figures together.)
Select one:
a. $65.74
b. $69.24
c. $70.49 Correct
d. $71.12
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