In: Finance
Eros Ltd's current share price is $27.88. It expects to pay a dividend of $1.97 at the end of the year. If you wish to earn a total return of 6.96%, what must the share price be at the end of the year?
Total return = (Share price at the end of the year - Current Share price + Dividend at the end of the year) / Current Share price
6.96% = (Share price at the end of the year - $27.88 + $1.97) / $27.88
6.96% * $27.88 = (Share price at the end of the year - $27.88 + $1.97)
1.94 = Share price at the end of the year - $25.91
Share price at the end of the year = $25.91 + 1.94
Share price at the end of the year = $27.85