A has just announced a dividend of 16p. Investors expect its dividend to grow in the future at a rate of 6% and they require a rate of return of 15% from their shares. What is the company's current cum-div share price?
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Expert's answer
2020-04-23T11:52:41-0400
Current cum-div share price is:
P0 = Current dividend + Ex-dividend share price = 16+16∗0.15−0.06(1+0.06)=204.44.
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