Assume MIE is a listed company and pays dividends once each year, and it just distributed this year's $1.30 dividend per share and expected to grow by 9% for the next year. After the next year, you estimate that MIE will increase its dividends by 7 % per year forever.

Required:

a)What is the current value of this share if your discount rate is 10%?

b)What is the current value of this share if MIE's dividend will grow by 7% forever from this year?

c)What is the current value of this share if MIE's $1.30 of dividend is fixed forever?

Answer rating: 100% (QA)

Lets calculate the current value of the share using the dividend discount model DDM for each scenari... View the full answer