Question
Question: A German company is expecting to grow at a rate of 10% in the first two years and by 5% in the following year.
Question:
A German company is expecting to grow at a rate of 10% in the first two years and by 5% in the following year. Followed by this, the company expects to settle to a constant growth rate of 2%. The company has paid 2 as a dividend per share recently.
The investor's required rate of return for the share is 17% p.a., and the market price for the stock is currently 25 per share.
Determine the value of this share. Is the share a desirable purchase?
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
