Question

uestion 4 ue to the advent and proliferation of life extension technology, the funeral services dustry has been seeing a steady year-to-year decline. Press F is a publicly-listed, w-cost chain of funeral homes that specialises in helping bereaved families pay espects. The firm has just paid its annual dividend of $7.75 per share. Shares of Press F currently trade on the market for a price of 3976 each, with investors equiring a return of 15.5% per annum. Based on the above information, which of the following is closest to the constant nnual rate of decline that investors anticipate in the dividends of Press F? a. 4.96% b. 3.34% D c. 3.47% d. 3.99% TEA e. 3.04%

Answer 1

price of the share=39.76

(7.75*(1+g))/(15.5%-g)=39.76

7.75+7.75*g=15.5%*39.76-39.76*g

g=(15.5%*39.76-7.75)/(7.75+39.76)

=-3.34%

ANSWER =3.34%

THE ABOVE WILL BE ANSWER..