Two (5 Marks) LMN company paid its shareholders a $0.5 annual dividend last year, The company...

 

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Two (5 Marks) LMN company paid its shareholders a $0.5 annual dividend last year, The company expects dividends to grow at a rate of 7% p.n. for the next four years. After that, dividends are expected to grow at a constant rate of 4% p.a. indefinitely. Your required rate of return is 10% p.a. a) What is the fair value of these shares to you? Show your calculations, (4 Marks) Two (5 Marks) LMN company paid its shareholders a $0.5 annual dividend last year, The company expects dividends to grow at a rate of 7% p.n. for the next four years. After that, dividends are expected to grow at a constant rate of 4% p.a. indefinitely. Your required rate of return is 10% p.a. a) What is the fair value of these shares to you? Show your calculations, (4 Marks)