ABC Ltd do not expect to be able to pay a dividend for the first four years
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Question:
ABC Ltd do not expect to be able to pay a dividend for the first four years of its operation. They expect to pay their first dividend of $1 at the end of year 4. They then expect that dividends will then grow by 15% a year.
What price should the investor be prepared to pay for each share if they feel the investment is risky and want a 20% return ?
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