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In part b of this qs it asks to find out the value of the company using the dividend growth model,there is no dividend to be paid this yr,pls tell how to calculate?
The market value is the present value of future dividends.
You can calculate individually the present value of the dividends at time 1, time 2, and time 3. From then on, dividends are expected to grow at a constant rate and so for these you can use the formula on the formula sheet (although for these you need to discount the answer from the formula for 3 years because the constant grown is not starting until after three years).
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