QUESTION 9

Risk Limited's dividend on 30 June 2009 was R2,20 per share. Due to the uncertainty in the exchange market, they expect a zero growth rate in dividends for the next two years. Thereafter planned expansions will cause the dividends to grow by 15 percent (15%) per year for three years and the growth will then stabilize on five percent (5%) per year for the foreseeable future. Shares with similar risk, currently have a 12 percent (12%) annual return. Calculate what you will pay currently per share, if you want to invest in the company. Show all your calculations.