the Fijian holding limited last dividend was $1.25 and the directors expect to maintain the historic 4%
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Question:
the Fijian holding limited last dividend was $1.25 and the directors expect to maintain the historic 4% annual rate of growth. you plan to purchase the stock today because you feel that the growth rate will increase to 7% for the next three years and the stock will then reach $25.00 per share.
- how much should you be willing to pay for the stock if you require a 16% return?
- how much should you be willing to pay for the stock if you feel that the 7% growth rate can be maintained indefinitely and you require a 16% return?
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