b) Lanigan bank is funded 100% by equity. Last year's dividend was £2.60. The bank expects to be able togrow and increase dividends at 2% p.a. for the foreseeable future. If an investor's expected rate of return is7% what does this imply for the share price?

Step 1: Given Value for Calculation last year dividend = d = $2.60Growth rate = g = 2%Expected Rate…

Answered: b) Lanigan bank is funded 100% by…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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b) Lanigan bank is funded 100% by equity. Last year's dividend was £2.60. The bank expects to be able to grow and increase dividends at 2% p.a. for the foreseeable future. If an investor's expected rate of return is 7% what does this imply for the share price?