Question $6$

Part A

Roxette, Inc., will pay fixed dividends at the end of each of the next two years. The dividend will then grow at a constant rate of $6$ percent per year thereafter forever. The current share price is $$70.$ What is next year's dividend payment if the required rate of return is $10$ percent?

Part B

Green Tech Ltd$.$ currently trades at $$75$ per share. The required return on its share is $10$ percent. The total return on its share is equally divided between a capital gains yield and a dividend yield. Green Tech's policy is to always maintain a constant growth rate in dividends. What is its current dividend per share?