The cost of capital for firms in the telephone and mobile phones sector is equal to...
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The cost of capital for firms in the telephone and mobile phones sector is equal to 16%. Moreover Nokia is expected to pay at the end of the year a dividend per share of €2 and Nokia shares trade currently at €50 per share. (a) Compute Nokia's expected growth rate of future dividends assuming that this rate is constant. (b) If, after bad news, the expected growth rate of future dividends suddenly drops to 10%, what happens to Nokia's share price and why? The cost of capital for firms in the telephone and mobile phones sector is equal to 16%. Moreover Nokia is expected to pay at the end of the year a dividend per share of €2 and Nokia shares trade currently at €50 per share. (a) Compute Nokia's expected growth rate of future dividends assuming that this rate is constant. (b) If, after bad news, the expected growth rate of future dividends suddenly drops to 10%, what happens to Nokia's share price and why?
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Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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