A fast growth share has the first dividend (t=1) of $1.94. Dividends are then expected to...

A fast growth share has the first dividend (t=1) of $1.94. Dividends are then expected to grow at a rate of 7 percent p.a. for a further 4 years. It then will settle to a constant-growth rate of 3.0 percent. . If the required rate of return is 16 percent, what is the current price of the share? (to the nearest cent)

Select one:

a. $16.75

b. $50.49

c. $14.92

d. $11.90

Expert Solution

Ans is a. $16.75

Calculations-

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jeff jeffy answered 2 years ago

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