Abl ltd. Paid a dividend of $250000 this year. The current return to shareholders of the companies in the same industry an Abl ltd. is 12%, although it is expected that an additional risk premium of 2% will be applicable to Abl ltd., being a smaller and unquoted company. Compute the expected valuation of Abl ltd., if : 1. The current level of dividend is expected to continue into the foreseeable future 2. The dividend is expected to grow at a rate of 4%pa into the foreseeable future 3. The dividend is expected to grow at a 3% rate for three years and 2% afterwards
Abl ltd. Paid a dividend of $250000 this year. The current return to shareholders of the companies in the same industry an Abl ltd. is 12%, although it is expected that an additional risk premium of 2% will be applicable to Abl ltd., being a smaller and unquoted company. Compute the expected valuation of Abl ltd., if : 1. The current level of dividend is expected to continue into the foreseeable future 2. The dividend is expected to grow at a rate of 4%pa into the foreseeable future 3. The dividend is expected to grow at a 3% rate for three years and 2% afterwards
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Abl ltd. Paid a dividend of $250000 this year. The current return to shareholders of the companies in the same industry an Abl ltd. is 12%, although it is expected that an additional risk premium of 2% will be applicable to Abl ltd., being a smaller and unquoted company. Compute the expected valuation of Abl ltd., if :
1. The current level of dividend is expected to continue into the foreseeable future
2. The dividend is expected to grow at a rate of 4%pa into the foreseeable future
3. The dividend is expected to grow at a 3% rate for three years and 2% afterwards
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