In 2021, Beximco Limited paid Tk 4 per share as dividend to its shareholders. The companys dividends
Question:
In 2021, Beximco Limited paid Tk 4 per share as dividend to its shareholders. The company’s dividends are expected to grow at 10% annually for the next 3 years. Thereafter, the dividend of the company is expected to grow at a constant rate of 5% per year forever. Mr. Hamid plans to buy the share of the company today and sell it at the end of year 3. Mr. Hamid has found out that the required return on Beximco share is 11%.
a. Calculate how much dividends Mr. Hamid is expected to get at the end of Year 1, Year 2 and Year 3.
b. Calculate how much Mr. Hamid would get by selling the Beximco share at the end of year 3.
c. Find out the intrinsic value of Beximco share today.
Financial Accounting For Management
ISBN: 9789385965661
4th Edition
Authors: Neelakantan Ramachandran, Ram Kumar Kakani