The current share price of Victoria Plc. is $49. The company has just paid a dividend of
Question:
The current share price of Victoria Plc. is $49. The company has just paid a dividend of $2.5 per share. Dividends are expected to rise by 5 percent per year indefinitely. The company is in a higher systematic risk class than the average share.
a. Calculate the intrinsic value of one share of Victoria Plc. if the required rate of return is 15 percent.
b. What is the cost of equity capital of Victoria Plc.?
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Step by Step Answer:
a Intrinsic Value The intrinsic value of a share can be calculated using the present value of future ...View the full answer
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Related Book For 
Foundations Of Finance
ISBN: 9781292155135
9th Global Edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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