Polycorp has just paid a dividend of $5.00. It is expected to pay a dividend $6.00 at the end of the first and second year. Its dividends will grow at 5.00%pa for the following five years. Dividends are then expected to grow at 4%pa for another two years, after which they are expected to grow at 3.00%pa forever. Shareholders required return on equity is 12.00% pa. What is the current price of Polycorp shares?

Answer rating: 100% (QA)

Step1 Dividend per share for the next 9 years Dividend per share Year 1 D1 600 per share Dividend pe... View the full answer