Shades plc has the following dividend history: Year Dividend per share Recently paid ....................... 21p Last year

Question:

Shades plc has the following history:
Year Dividend per share
Recently paid ....................... 21p
Last year ............................ 19p
Two years ago ....................... 18p
Three years ago ....................... 16p
Four years ago ....................... 14p
Five years ago ....................... 12p
The rate of return required on a share of this risk class is 13 per cent. Assuming that this growth rate is unsustainable and Shades will halve its historic rate in the future, what is the value of one share?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...