Answer to Question #54502 in Finance for Asif
a) What is the expected dividend next year?
b) If an investor requires 12%, what would be the price of the share?
a) The expected dividend next year will be 5*1.08 = $5.
b) If an investor requires 12%, the price of the share will be P = D/(r - i) = 5/(0.12 - 0.08) = $125.
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