FN0905A

Stocks shares and dividend management

Tutorial questions
Lecture 7 Share valuation 1

1 If dividend is 75p (constant) and required return is 15% what is

current price (P0)

2 As above but assume the latest dividend was 75p but the
dividend is expected to grow by 10% per annum.

3 Last dividend (D0) was 16p and previous dividends have been as
follows

D-5 9p
D-4 10p
D-3 10p
D-2 11p
D-1 13p
D0 16p

Required return is 15%. Calculate P0

4 As above but a different set of dividends and required return is

12% - calculate P0.

D-4 68p
D-3 41p
D-2 56p
D-1 78p
D0 82p