Question
The dividends of ordinary shares of LMN Corporation has been experiencing an annual growth rate of 10%.The present dividend per share is P 1.20. The
The dividends of ordinary shares of LMN Corporation has been experiencing an annual growth rate of 10%.The present dividend per share is P 1.20. The investor is requiring a 15% rate of return.Required:Calculate the current valueof LMN's 200 ordinary sharesunder each of the followingindependent conditions. a) dividends to continue growing at a constant rate of 10% _________.b)dividend growth rate is anticipatedto decrease by 1.5%and to remain constantat that level P______.c)Dividend growth rate is expected to increase to 12.5%and to remain constantat that level P_____.
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