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Hi John
You said for part c of question 6 that you would expect the market value in 2 years to be the current market value growing at the same rate that dividends grow by ie $2.80 x 1.0675^2 =$3.19
Is there a way to get to that figure using the formula in the chapters ie P0 =….
I tried to have a go at it but I got nowhere. If it’s not that simple it’s ok, I just thought it would improve my understanding if I could work it out
Cheers
Hugh
If you use the dividend growth formula and let Do be the dividend in two year time (which is the current dividend x 1.0675^2) then you will get the market value in 2 years time, which will be $3.19 as well 🙂
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