Homework Answers
The current share price as per the Gordon growth Model is :
Po = D1/Re - g
The expected dividend (D1) = $3.66
Re = 14%
Growth rate = 5%
Po = $3.66/ 1.14 + $3.66* 1.05/ 0.14 - 0.05
= $3.2105 + $42.7 ( rounded off to two decimal places)
=$45.9105
= $45.91 ( rounded off to two decimal places)
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