If you are told that an initial dividend will be paid and then for the next 5 years there be an increase and a required return; how do you find value of the share today?
Initial Dividend + Increase
______________________
1 + Required Return ^ each year
Example
Year 2:
14
__
1.11^2
How do you get your coupon payment?
COUPON RATE X PAR VALUE
After you get your P0, they ask for the future price in 3 years... You find that how? Will you use your dividend payment? Which rate do you use?
Inputing:
N
I/Y - Growth
PV
If you are told that a dividend will only be paid for the next X years with a certain required return, how would you find the current share price?