The dividend per share next year of EMP Ltd is expected to be $1.20, and the required rate of return on the shares is 12% p.a. The dividends are expected to grow at a rate of 20% p.a. the following year, at 15% p.a. in the year after that, and at a constant rate of 8% p.a. for the foreseeable future after that. Based on the above information, the estimated price of EMP Ltd’s shares is closest to: Group of answer choices $31.80. $35.20. $37.10. $44.70.

The dividend per share next year of EMP Ltd is expected to be $1.20, and the required rate of return on the shares is 12% p.a. The dividends are expected to grow at a rate of 20% p.a. the following year, at 15% p.a. in the year after that, and at a constant rate of 8% p.a. for the foreseeable future after that. Based on the above information, the estimated price of EMP Ltd’s shares is closest to: Group of answer choices $31.80. $35.20. $37.10. $44.70.

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Description: The dividend per share next year of EMP Ltd is expected to be $1.20, and the required rate of return on the shares is 12% p.a. The dividends are expected to grow at a rate of 20% p.a. the following year, at 15% p.a. in the year after that, and at a c

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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The dividend per share next year of EMP Ltd is expected to be $1.20, and the required rate of return on the shares is 12% p.a. The dividends are expected to grow at a rate of 20% p.a. the following year, at 15% p.a. in the year after that, and at a constant rate of 8% p.a. for the foreseeable future after that. The day after you estimate EMP Ltd's share price, its shares are trading at $30.00. Based on the expected dividend per share of $1.20 and the required return of 12%, the implied constant growth rate in the company’s dividends now is closest to: Group of answer choices 8.0%. 8.6%. 9.0%. 9.2%.
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