Consider the equity of Omega Drug Company, which has a new massage ointment and is enjoying rapid growth. The dividend per share a year from today will be €1.15. During the following four years (until t=5) the dividend will grow at 5 percent per year (g1 = 5%). After that, growth (g2) will equal 1 percent per year. The required return (R) is 8 percent.

 Find the value of a share by using the growing annuity formula

Answer rating: 100% (QA)

Dividend per share at t1 D1 115 Dividend growth rate from t2 to t5 g1 5 Dividend growth ra... View the full answer