X company focuses in the forthcoming 3 years on growth, therefore plans to pay low dividends...
X company focuses in the forthcoming 3 years on growth, therefore plans to pay low dividends at EUR100 per share. From year 4, however, dividend is planning to grow by 10% annually ad infinitum. Expected return on shares(opportunity cost of capital) is 20%.
A. If a shareholder plans to sell their stock at the end of the 3rd year, what will be the share price in that moment, based on currently available information.
B. What is the current fair price of the stock.
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X company focuses in the forthcoming 3 years on growth,
therefore plans to pay low dividends...
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