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Question 7: Megacorp has been paying dividends for a number of years. This morning, they announced their latest dividend (for the previous year) to be
| Question 7: | ||||||
| Megacorp has been paying dividends for a number of years. This morning, they announced their latest dividend (for the previous year) to be what you see in the table below. Consider this previous dividend as paid, i.e. it belongs to the shareholders who owned the stock as of this morning. The dividends of Megacorp are belived to increase at the rate shown below for the next 7 years, and then carry on growing at the constant (long-term) growth rate shown below. The price you are willing to pay for each share of Megacorp has been provided below. What is your required rate of return? | ||||||
| Last Dividend (this morning) in $s | 1,57 | |||||
| Short Term (7yrs) Growth Rate (%) | 8,70 | |||||
| Long term (cont.) Growth Rate (%) | 3,70 | |||||
| Share Price Today in $s | 25,32 | |||||
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