Homework answers / question archive / You are considering buying 10% of a company

You are considering buying 10% of a company

Finance

Share With

You are considering buying 10% of a company. The company currently is not earning any money. But, you think that the company will be able to start paying a dividend of $5 Million (you will receive 10% of this) in six years. You expect the dividend to grow 3.2% per year forever. If the cost of equity is 14%, what would you expect to pay for 10% of the company?