Use Dividend Valuation Model

Exercise 2. Hairee Bhd's stock is selling at RM20 per share. Its current EPS and dividend payout ratio are RM2.50 and 30% respectively. Given the slow economy, the firm expects that the growth rate of EPS and dividend to decline by 5% for the next two years but then grow at a more gradual rate indefinitely. If the required rate of return for similar investment is 15%, what is the projected price of the company at the end of year 2