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Hanson limited paid recently a dividend of Ksh 10.00 per share. Hansen has a beta coefficient of 0.83, an...

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Hanson limited paid recently a dividend of Ksh 10.00 per share. Hansen has a beta coefficient of 0.83, an equity risk premium of 9.45%. The risk-free rate of return is 4.65 percent (Hint. CAPM MODEL). An analyst has estimated that Hanson's dividend per share will grow initially at a constant rate of 20 percent for two years and then decline linearly to 5 percent over a 10-year period. Thereafter, growth rate will remain constant indefinitely. • Compute the price of Hanson Limited share today • Compute the price of Hanson Limited share, three years from now. 10 MARKS

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To compute the price of Hanson Limited share today we can use the constant growth dividend discount View the full answer


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Financial reporting, financial statement analysis and valuation a strategic perspective

Financial reporting, financial statement analysis and valuation a strategic perspective

ISBN: 978-0324789416

7th Edition

Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw

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Posted Date: July 08, 2023 04:37:33
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This model assumes that the required rate of return will remain the same for the foreseeable future and also assumes that the growth rate is going to be constant. The same results will be obtained using the sustainable growth rate formula that states g = b x ROI

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