FIN3403

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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?
CF
- CO1 = dividend
- F01 = x years
NPV
- I = required return
- NPV = CPT