Equity analysts predict Angel will pay its first annual dividend of $0.02 in 2021. The dividend...

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Equity analysts predict Angel will pay its first annual dividendof $0.02 in 2021. The dividend in 2022 is expected to be 25% largerthan the 2021 dividend as the company’s cash flows growsubstantially. Beyond 2022 the dividend is expected to increase by4% p.a. forever. If the required return is 12%, then what is thefair value of an Angel share today, in 2019?

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Required rate 1200 Year Previous year dividend Dividend growth rate Dividend current year Horizon value Total Value Discount factor Discounted value 1 0 000 0 0 112 0 2 0 000 002 002 12544    See Answer
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Equity analysts predict Angel will pay its first annual dividendof $0.02 in 2021. The dividend in 2022 is expected to be 25% largerthan the 2021 dividend as the company’s cash flows growsubstantially. Beyond 2022 the dividend is expected to increase by4% p.a. forever. If the required return is 12%, then what is thefair value of an Angel share today, in 2019?

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