Solution-What would the share values be

What would the share values be

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If P5 is 1175, P0 is 666.67, k is 15%, g is 12%, D1 is 20 and D6 is 35.25 P5 captures the value at the end of year 5 of all dividends from D6 onward into the future (i.e., D7, D8, D9, etc.). Assuming no dividends are paid until D6, what would the following share values be?

1) P0, the value now, at time 0?

P0 should be $666.67

2) P1, the value 1 year from now?

P1 = $666.67*(1+g) = $666.67*1.12 = $746.67

3) P2, the value 2 years from now?

P2 = $746.67*(1+g) = $746.67*1.12 = $836.27

Reference no: EM132467955

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What would the share values be

Reference no: EM132467955

Reference no: EM132467955

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