2. Consider a share that is expected to pay a growing dividend every year. The first dividend div₁ =£5 is due in one year. The annual growth rate during the first 3 years is g=3%, after that the dividend will grow at g=1% forever. The annual discount rate is r=4%. What is the share price today (Lecture 3)?
2. Consider a share that is expected to pay a growing dividend every year. The first dividend div₁ =£5 is due in one year. The annual growth rate during the first 3 years is g=3%, after that the dividend will grow at g=1% forever. The annual discount rate is r=4%. What is the share price today (Lecture 3)?
Chapter7: Valuation Of Stocks And Corporations
Section7.6: Valuing Nonconstant Growth Stocks
Problem 3ST
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