Dividends on an equity are paid out annually in arrears. A number of shares are bought ex-dividend by an investor precisely two months prior to the next dividend payment, which is anticipated to be £12.68 per share. It is also anticipated that dividends will continue to grow at a rate of 6% annually in perpetuity.Determine the value of each share by assuming an interest rate of 7.8% pa. Your response should be provided to two decimal places.
Dividends on an equity are paid out annually in arrears. A number of shares are bought ex-dividend by an investor precisely two months prior to the next dividend payment, which is anticipated to be £12.68 per share. It is also anticipated that dividends will continue to grow at a rate of 6% annually in perpetuity.Determine the value of each share by assuming an interest rate of 7.8% pa. Your response should be provided to two decimal places.
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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Dividends on an equity are paid out annually in arrears. A number of shares are bought ex-dividend by an investor precisely two months prior to the next dividend payment, which is anticipated to be £12.68 per share. It is also anticipated that dividends will continue to grow at a rate of 6% annually in perpetuity.
Determine the value of each share by assuming an interest rate of 7.8% pa. Your response should be provided to two decimal places.
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