- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
Beta plc is about to pay a dividend of $0,40/share. Dividends are growing at a rate of 5%p.a. The shareholder’s required rate of return in 20%p.a. Rate of corporation tax is 25%. What is the current market value per share?
Why are you setting me a test?? You do not say what your problem is.
You use the dividend growth formula from the formula sheet to calculate the market value. The formula gives the ex div market value, and since there dividend is about to be paid, we need to cum div value. So we add the current dividend of $0.40 to the ex div value to get the cum div value.
(The free lectures on the valuation of securities will help you)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.