Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,541.61
DanielDng$2,340.70
Visitor$830.00
Visitor$610.00
Visitor$240.00
Visitor$223.09
Visitor$210.00
Visitor$170.00
Visitor$160.00
Visitor$150.00
Visitor$150.00
Visitor$130.00
Visitor$120.00
Visitor$120.00
Visitor$90.00
Visitor$80.00
Visitor$66.43
Visitor$60.00
Visitor$50.00
Visitor$50.00
 

Question 6  DDM

For a price of $102, Andrea will sell you a share which just paid a dividend of $10 yesterday, and is expected to pay dividends every year forever, growing at a rate of 5% pa.

So the next dividend will be ##10(1+0.05)^1=$10.50## in one year from now, and the year after it will be ##10(1+0.05)^2=11.025## and so on.

The required return of the stock is 15% pa.

Would you like to the share or politely ?



Copyright © 2014 Keith Woodward