Solution-Consistent with the pricing of a growing perpetuity

Consistent with the pricing of a growing perpetuity

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A) A company last paid a dividend of £2 per share. If the expected return on its equity is estimated at 10% and its shares are currently quoted on London Stock Exchange at £60, what should the dividend growth rate be to ensure that the price is consistent with the pricing of a growing perpetuity?

B) Between Nov 2015 and Aug 2016, Microsoft paid an annualised dividend of $1.44 per share. If dividends kept growing at a rate of 12% and the rate of return of Microsoft's equity were assumed to be 14.54%, what would be the price of a single share

Reference no: EM132584810

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Consistent with the pricing of a growing perpetuity

Reference no: EM132584810

Reference no: EM132584810

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