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Q) XYZ Ltd last paid a dividend of $0.20 three years ago. Today the company announced they will resume paying dividends. The planned dividends are
Q) XYZ Ltd last paid a dividend of $0.20 three years ago. Today the company announced they will resume paying dividends. The planned dividends are $0.65 in one year's time, $0.75 in two years' time, and thereafter dividends will increase by a constant rate of 4% p.a. indefinitely. If the required rate of return for XYZ is 12%, what is a fair price for one share today?
a. $9.38 b. $8.37 c. $0.58 d. $8.95 e. $9.15
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