alleryStart learning →A share just paid Rs 4 and dividends grow 5 percent forever; required return is 15 percent. What is its value?
ARs 42
BRs 84
CRs 26.67
DRs 40
Answer & Solution
Correct answer: A. Rs 42
Next dividend is 4 x 1.05 = 4.20, and 4.20 / (0.15 - 0.05) = Rs 42.
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