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Ocasa Ltd. Just paid a dividend of $6.00 per share next year, and that the dividend will grow at the same rate as its profits.
Ocasa Ltd. Just paid a dividend of $6.00 per share next year, and that the dividend will grow at the same rate as its profits. High profits are expected during this period, with the first three years of growth estimated to be 13%, 11% and 10% respectively, before returning to constant long+ term industry growth rate of 6% per year. The firms cost of equity is 15%. i. What is the firms share price today (P0)? ii. What is the expected share price next year (P1)? iii. Calculate the dividend yield for year 2. iv. Calculate the current capital gains yield (year 1)
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