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Palozzi will pay a dividend next year of 25p. Dividends are then expected to grow...

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Finance

Palozzi will pay a dividend next year of 25p. Dividends are then expected to grow at a rate of 15% per annum for three further years after that. The dividend will then grow at 6% per annum for five years. After that (year 10 onwards) growth will slow to 2% per annum, which will be assumed to be the dividend growth rate thereafter. The cost of equity is 12%, the debt rate is 6% and the tax rate is 25%. Palozzi is 80% equity financed. What is the share price today?

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