Question: A common stock is currently eaming RM4 per share and will pay RM2 per share in dividends at the end of the current year. Assuming

A common stock is currently eaming RM4 per share and will pay RM2 per share in dividends at the end of the current year. Assuming that the earnings of the corporation increase at the rate of 5% for the first five years, 2.5% for the second five years and 0% thereafter. Assume that the corporation plans to continue to pay 50% of its eamings as dividends, find the theoretical price to earn an investor an annual effective yield rate of 10%

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