Polycorp has just paid a dividend of $5

Finance Aug 15, 2020

Polycorp has just paid a dividend of $5.00. Given the economic climate it is expected dividends are going to be cut by 20% pa for the next 3 years. After that they are expected to be stable for 2 more years. Dividends are then expected to grow at 3.00% pa forever. Shareholders required return on equity is 12.00% pa. What is the estimated value of Polycorp shares?

Expert Solution

The estimated value of Polycorp share = $27.65 Or $28

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