The next dividend payment by Invercargill Building Ltd will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 5% forever. If one Invercargill share currently sells for $73.15, what is the required return? Maungati Food Ltd pays a constant $15.25 dividend per share. The company will maintain this dividend for seven years and will then cease paying dividends forever. If the required return on this share is 9.2%, what is the current share price? Otematata Stone Works has an issue of preference shares outstanding that pays a $2.85 dividend every year, in perpetuity. If this issue currently sells for $77.32 per share, what is the required return?

There are three questions but due to our protocol, we solve only first question otherwise as stated.…

Answered: The next dividend payment by…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The next dividend payment by Invercargill Building Ltd will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 5% forever. If one Invercargill share currently sells for $73.15, what is the required return?
Maungati Food Ltd pays a constant $15.25 dividend per share. The company will maintain this dividend for seven years and will then cease paying dividends forever. If the required return on this share is 9.2%, what is the current share price?

Otematata Stone Works has an issue of preference shares outstanding that pays a $2.85 dividend every year, in perpetuity. If this issue currently sells for $77.32 per share, what is the required return?

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