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  3. orange paid a dividend of 150,000 this year. the r

Orange paid a dividend of 150,000 this year. The required return of shareholders of companies...

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Accounting

Orange paid a dividend of 150,000 this year. The required return of shareholders of companies in the same industry as Orange is 11%, although it is expected that an additional risk premium of 1% will be applicable to Orange, being a smaller company. Calculate the value of Orange under following circumstances;

  1. The current level of dividend is expected to remain unchanged for the foreseeable future.
  2. The dividend is expected to grow at the rate of 2% per annum for the foreseeable future.
  3. The current level of dividend is expected to remain unchanged for three years and then to grow at the rate of 2% per annum to perpetuity.

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