A share is going to pay its first dividend of $1.60 in one year. The value of
Fantastic news! We've Found the answer you've been seeking!
Question:
A share is going to pay its first dividend of $1.60 in one year. The value of the share today is $30 for investors who require a rate of return of 10% p.a. Assume the annual dividends will grow at a constant rate. Using the dividend discount model (DDM), calculate the constant annual growth rate.
A share is expected to pay a dividend of $2 in 1 year and $3 in 2 years. Then the dividend will grow at 8% p.a. until the end of year 4. After that, the growth rate would become 3% p.a. forever. The rate of return is 11% p.a. effective. Using the dividend discount model (DDM), calculate the value of the share today.
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date: