Question: a. Mordialloc Optical Pty Ltd declared a dividend of $2.15 yesterday. The company is expected to grow at a steady rate of 5 per cent

 a. Mordialloc Optical Pty Ltd declared a dividend of $2.15 yesterday.

a. Mordialloc Optical Pty Ltd declared a dividend of $2.15 yesterday. The company is expected to grow at a steady rate of 5 per cent for the next several years. If shares such as these require a rate of return of 15 per cent what should be the market value of this share? b. Exego Pty Ltd is expected to pay a dividend of $2.25 next year. The forecast for the share price a year from now is $37.50. If the required rate of return is 14 per cent what is the current share price? Assume constant growth. c. Cofield Pty Ltd is expected to grow at a constant rate of 7 per cent. If the company's next dividend is $1.15 and its current price is $22.35, what is the required rate of return on this share

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!