JMM Ltd. is growing at a rapid pace. Dividends are expected to grow at a rate of 25% for the next 5 years, after which the growth rate will fall off to a constant rate of 8% per year thereafter. The company has just paid a dividend of €4.75. If the required rate of return is 14%, what is the current price of the share?

ABC Ltd. expect to pay dividends of €1 next year, €2 the following year, and €2.50 the year after that. After the third year, the dividend will grow at a constant rate of 5% per year. If the required rate of return is 10%, what is the share price today?

Answer rating: 100% (QA)

To solve both problems we need to use the dividend discount model The dividend discount mo... View the full answer