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Hello John,
I’m sure I seen this in one of your lectures but cannot seem to find it now.
I came across a question which was roughly……
Calculate the market value of shares that have just paid a dividend of 23c. They will pay the same dividend next year, then it will grow by 6% each year. Required return is 14%.How would you put that into the growth model formula?
Thanks
The top bit of the formula ( Do (1 + g) ) is actually the dividend in 1 years time.
Usually it is the current dividend plus one years growth, but in this question it is simply 0.23.
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