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The current dividend on an equity share of a company is $3.the present growth rate is...

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Finance

The current dividend on an equity share of a company is $3.thepresent growth rate is 50%. However, this will decline linearlyover a period of 10 years and then stabilize at 12% . What is theintrinsic The value of that company if investors require a returnof 16%.

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The growth rate in year 1 is 50 It has to decline to 12 in 10 years Hence decline in growth rate per year over next 10 years 50 12 10 380    See Answer
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The current dividend on an equity share of a company is $3.thepresent growth rate is 50%. However, this will decline linearlyover a period of 10 years and then stabilize at 12% . What is theintrinsic The value of that company if investors require a returnof 16%.

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