You are considering investing in ICI. Suppose ICI currently paid Rs.3 dividend and enjoying super growth and
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Question:
You are considering investing in ICI. Suppose ICI currently paid Rs.3 dividend and enjoying super growth and expected to pay 30% more in dividends each year for 3 years. After these three years the dividend growth rate is expected to be 2% per year forever. If the required return for ICI common stock is 11%, what is a share worth today? And if ICI stock is currently selling at Rs.68, should you buy this stock at this price or not?
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