Question
The dividends from year 1 to year 5 are estimated as shown in the left. From year 6, the company issues dividend at a constant
The dividends from year 1 to year 5 are estimated as shown in the left. From year 6, the company issues dividend at a constant growth rate, which is 5%. The cost of capital is 10%. What is the stock price per share based on given information, using DDM method?
| DDM model | (in dollars) | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | year 7 |
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 5 | 6 | 7 | 8 | 10 | 10.5 | ||
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Finance Of International Trade
Authors: Eric Bishop
1st Edition
0750659084, 978-0750659086
