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DGM qstn

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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September 9, 2021 at 8:40 am #635056
cadhakan
Member
- Topics: 71
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Gummy ltd hasjust paid dividend of 8c per share . past 3 years of dividend were 6.8c , 7c , 7.4c(earlier first). shareholders required return 11%.
determine current share price using dividend growth model .
sircan you help me out in this qstn as this type of qstn i confused a lot..
September 9, 2021 at 12:56 pm #635085
John Moffat
Keymaster
- Topics: 57
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You need to calculate the average rate of growth over the last 4 years (the third root of 8/6.8, minus 1) and then use the dividend growth formula to calculate the MV.
Again, I explain all of this in my free lectures.
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