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Question 7 Polycorp has just paid a dividend of $5.00. Given the economic climate it is expected dividends are going to be cut by 20%
Question 7
Polycorp has just paid a dividend of $5.00. Given the economic climate it is expected dividends are going to be cut by 20% pa for the next 3 years. After that they are expected to be stable for 2 more years. Dividends are then expected to grow at 3.00% pa forever. Shareholders required return on equity is 12.00% pa.What is the estimated value of Polycorp shares?
(In dollars and cents accurate to the nearest cent)
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