Question: LAM Corp paid a dividend of $ 4 per share to its stock holder yesterday. LAM's dividend is expected to increase oftherate of 20 percent

LAM Corp paid a dividend of $ 4 per share to its stock holder yesterday. LAM's dividend is expected to increase oftherate of 20 percent per year for the next four years Four years from now , you expect LAM to have earnings of $ 500 million and $ 200 million shares of common stock out standing you also expect it to have a p/ E ratio of 18. Investors requie a return 12% to invest in LAM.

What do you think should be the prize of one share of LAM today ?

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To determine the price of one share of LAM today we can use the dividend discount model DDM approach which calculates the present value of future divi... View full answer

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