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hello sir, I didn’t understand the numerical part of this question’s required number a.
Please make me clearThe dividend valuation formula gives the current market value of a share (i.e. Po) assuming that the first dividend is in 1 years time.
Here, the first dividend is in 3 years time (2 years later than in 1 years time), and therefore using the formula will give a market value 2 years later (i.e. at time 2) and therefore needs discounting for 2 more years to get a market value now.And on the same question’s (1.6*1.3)/(0.09-0.03) is done to calculate present value of dividend using rate 3%.
My question is how 1.6 figure is calculated/ taken because i did’nt find this figure in question
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