A fast growth share has the first dividend (t=1) of $1.48. Dividends are then expected to...

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Finance

A fast growth share has the first dividend (t=1) of $1.48.Dividends are then expected to grow at a rate of 6 percent p.a. fora further 2 years. It then will settle to a constant-growth rate of2.3 percent. . If the required rate of return is 12 percent, whatis the current price of the share? (

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D1 148 D2 D1 x 1g 148 x 106 15688 D3 D2 x 1g 15688 x 106 1662928 D4 D3 x 1g 1662928 x 1023 1701175344 Price of share in year 3 P3 can See Answer

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A fast growth share has the first dividend (t=1) of $1.48.Dividends are then expected to grow at a rate of 6 percent p.a. fora further 2 years. It then will settle to a constant-growth rate of2.3 percent. . If the required rate of return is 12 percent, whatis the current price of the share? (

A fast growth share has the first dividend (t=1) of $1.48. Dividends are then expected to...

90.2K

Verified Solution

Question

Finance

A fast growth share has the first dividend (t=1) of $1.48.Dividends are then expected to grow at a rate of 6 percent p.a. fora further 2 years. It then will settle to a constant-growth rate of2.3 percent. . If the required rate of return is 12 percent, whatis the current price of the share? (

Answer & Explanation Solved by verified expert

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