QUESTION 19
You are planning to buy a share of MTX Ltd.
You expect the company to pay a dividend of $2,00 this year and $4,00 next year.
Thereafter you expect the dividends to grow at a constant rate of 12%.
If your required return for buying the company’s share is 15%, what would you pay for the share today?
I get an answer of $117.37
I discounted both dividends by one and two years respectively at 15%.
Discounted the GGM by two years at 15% using the year two dividend.
My answer is not listed.
Solutions appreciated
You are planning to buy a share of MTX Ltd.
You expect the company to pay a dividend of $2,00 this year and $4,00 next year.
Thereafter you expect the dividends to grow at a constant rate of 12%.
If your required return for buying the company’s share is 15%, what would you pay for the share today?
- $121,42
- $131,85
- $135,33
- $149,33
I get an answer of $117.37
I discounted both dividends by one and two years respectively at 15%.
Discounted the GGM by two years at 15% using the year two dividend.
My answer is not listed.
Solutions appreciated