Value of a Share Explained in this Solution
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ABC is expected to pay a dividend of 3.50 per share next year. Calculate the value of a share if dividends are expected to grow at 4.0%, the riskless rate is 2.0%, the expected market risk premium is 5.0%, and the company's beta is 1.20?
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Solution Summary
The share price is found in a few lines of reasoned calculations.
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Share price according to dividend discount model
Dividend discount model: Share price = Next year's dividend / (expected ...
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