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hope you are in good health Sir.
Respected Sir i am unable to solve this question. can you solve it for me and also tell me the concept and logic behind?
what i did not understand is how the dividend is calculated?Q: Cant Co has a cost of equity of 10% and has forecast its future dividends as follows: Current year: No dividend Year 1: No dividend Year 2: $0.25 per share Year 3: $0.50 per share and increasing by 3% per year in subsequent years What is the current share price of Cant Co using the dividend valuation model?
$7.35 $5.57 $6.11 $6.28
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – it has answers and explanations!
You ask how the dividend is calculated, but the dividends are given in the question – you are not required to calculate them.
As far as the concept and logic are concerned, this is all explained in detail in my free lectures. I am fact work through a very similar example in my lecture working through Chapter 15 of our free lecture notes.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
this mcq was taken from bpp revision kit and i did look for the answer but in the explanation i did not understand how the answer was 6.11.
i will check on the lecture that you mentioned
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