A company just paid dividends of $5 per share. Pinder Co will increase its dividends by 2%
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A company just paid dividends of $5 per share. Pinder Co will increase its dividends by 2% every year forever. The company pays dividends once per year, at the end of the year. The standard deviation for Pinder Co’s stock returns is 30% and its covariance with the market is 0.05. The expected return on the market portfolio is 10%, and the standard deviation of the market portfolio is 20%. The bond yield for government bonds is 1%. Using the dividend discount model and the capital asset pricing model to estimate the appropriate discount rate, what should be Pinder Co’s share price? (Round to the nearest two digits)
Related Book For
Applying International Financial Reporting Standards
ISBN: 978-0730302124
3rd edition
Authors: Keith Alfredson, Ken Leo, Ruth Picker, Paul Pacter, Jennie Radford Victoria Wise
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