Find the present value of the following cash flow stream for a share

 Dividends for the next four years will be $4.00, $4.00, $5.00, $5.00

After year four dividends will increase at a 3% rate forever

The market's required rate of return for this type of equity is 7%

Note: show your working. Marks are awarded for the process. If you have difficulty showing your working in the answer panel, you can upload an excel file or word doc.

Explain, in relation to an investor purchasing shares in a company, the principal/agent (moral hazard) problem. 

Answer rating: 100% (QA)

Solution A 50623 50624 Annual dividends Equity Valuation 50625 Required return 50626 ... View the full answer