ABC plc pays dividends that are expected to grow at 5 per cent each year. These will
Question:
ABC plc pays dividends that are expected to grow at 5 per cent each year.
These will stop in year 5, at which point the company will pay out all its earnings as dividends. Next year’s dividend is £0.87 and its EPS at the time will be £2.02. If the appropriate discount rate on ABC plc shares is 14 per cent, what is its share price today?
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Step by Step Answer:
The share price of ABC plc can be calculated using the following steps Calculate the present value o...View the full answer
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Related Book For 
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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