An equity pays dividends annually in arrears. An investor purchases ex-dividend a number of shares exactly 1 month before the next dividend payment. It is known that the last dividend payment was £15.84 per share. Subsequent dividends are expected to increase in perpetuity by 5% per annum. Assuming an interest rate of 9.2% pa, calculate the value of each share. You should give your answer to 2 decimal places. Answer: Check

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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An equity pays dividends annually in arrears. An investor purchases ex-dividend a number of shares
exactly 1 month before the next dividend payment. It is known that the last dividend payment was
£15.84 per share. Subsequent dividends are expected to increase in perpetuity by 5% per annum.
Assuming an interest rate of 9.2% pa, calculate the value of each share. You should give your answer
to 2 decimal places.
Answer:
Check
Transcribed Image Text:An equity pays dividends annually in arrears. An investor purchases ex-dividend a number of shares exactly 1 month before the next dividend payment. It is known that the last dividend payment was £15.84 per share. Subsequent dividends are expected to increase in perpetuity by 5% per annum. Assuming an interest rate of 9.2% pa, calculate the value of each share. You should give your answer to 2 decimal places. Answer: Check
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