Assume that an investor wanting a 10% return on investment anticipates that OML limited will pay a
Question:
Assume that an investor wanting a 10% return on investment anticipates that OML limited will pay a $2.55 dividend to shareholders in 2022. Following that the equity investor forecasts that OML will pay $ 3.32, $ 4.72, $5.86, and $6.22 in dividends over the next four years. According to the equity investor, the OML's share price will increase from $ 14.12 to $ 18.88 in a year and to $42.22 in four years.
a) using the single period divided discount model estimate the value of the OML share and provide some recommendation to an equity investor with supporting evidence.
b) using the multi period divided discount model estimate the value of the OML share and provide some recommendation to an equity investor with supporting evidence.
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta