Question 17 paid a dividend of 51 and is expected to maintain a constant dividend growth...

Question

Question

Answer 1

Answer #1

Answer = 11.62%

Explanation

As per Constant Dividend Model

IV =D1/(Re-g)

Iv = Value of share =71

D1 = Next Dividend =5.13 x 1.041 = 5.34

Re =Expected Return , we have to find same

g= growth rate =4.1%

Substituting Values in the equation we get

71 =5.34/(Re- 0.041)

Re = (5.34+2.911)/71

=11.62%

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Answer 2

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