Question
Part A Roxette, Inc., will pay fixed dividends at the end of each of the next two years. The dividend will then grow at a
Part A Roxette, Inc., will pay fixed dividends at the end of each of the next two years. The dividend will then grow at a constant rate of 6 percent per year thereafter forever. The current share price is $70. What is next years dividend payment if the required rate of return is 10 percent?
Part B Green Tech Ltd. currently trades at $75 per share. The required return on its share is 10 percent. The total return on its share is equally divided between a capital gains yield and a dividend yield. Green Techs policy is to always maintain a constant growth rate in dividends. What is its current dividend per share?
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