Kelly Ltd. has just paid a cash dividend of $6.00 per share. The required return on...
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Kelly Ltd. has just paid a cash dividend of $6.00 per share. The required return on its stock is 12%. If the dividend is expected to grow at a constant rate of 8% per annum: Required: i. Calculate the current value of the stock. ii. Determine what the stock will be worth in five (2 marks) (3 marks) iii. What is the stock price today, if the dividend is expected to grow at 15% per year for the next three years and then settle to 8% per year indefinitely? (7 marks) (Total 20 marks) e years. y Kelly Ltd. has just paid a cash dividend of $6.00 per share. The required return on its stock is 12%. If the dividend is expected to grow at a constant rate of 8% per annum: Required: i. Calculate the current value of the stock. ii. Determine what the stock will be worth in five (2 marks) (3 marks) iii. What is the stock price today, if the dividend is expected to grow at 15% per year for the next three years and then settle to 8% per year indefinitely? (7 marks) (Total 20 marks) e years. y
Expert Answer:
Answer rating: 100% (QA)
To calculate the current value of the stock we can use the dividend discount model DDM formula The D... View the full answer
Related Book For
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
Posted Date:
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