Chloe Dickson is interested in purchasing the ordinary share of fair mount Ltd. which is currently priced at $37.45. The company expects to pay a dividend of $2.58 next year and expects to grow at a constant rate of 7 percent.

a. What should the market value of the share be if required rate of return is 12 percent
b. At the current Price of $37.45 shares of Fairmount Ltd a good Buy? why Or why not?

Answer rating: 100% (QA)

a To calculate the market value of the share we can use the constant growth dividend valuation model ... View the full answer