You own 500 shares of a company, which has just paid an annual dividend of 15 cents per share and that dividend is expected to grow at a rate of 20%

You own 500 shares of a company, which has just paid an annual dividend of 15 cents per share and that dividend is expected to grow at a rate of 20% per annum for the next 5 years and at a rate of 5% per annum forever after that. Assuming a required rate of return of 10%, the current market price of a share will be -

Question 7 options:

a) $6.44

b) $5.44

c) $4.63

d) None of the above