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Jim Ltd
Jim Ltd.'s next dividend will be $4, the dividend is expected to grow at 7% p.a., for the following 3 years. After that the growth rate in dividends will be 5% per year indefinitely. Required rate of return is 10% p.a.
Required:
Calculate the current value of Jim Ltd.'s shares.
Answer 7: [Answer here]
Year
Dividend Amount
1
2
3
4
Share Price: (Discounted present values)
Year
Dividend
Discount factor
Amount
1
2
3
Growth model value
-
-
3
Total
=
[Show workings here]
Expert Solution
So, current value of Jim Ltd.'s shares is $84.25
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