• Company X has paid constant dividend $2 per share for years. Investors required return is 7%.
• What is company X share price?
• If company announces that they will increase dividends to $2,1 per share starting next period and confirm their intention to keep on increasing dividend by 5% per year. What is company X share price now?
• What will be the share price in 10 years time?
• What are the assumptions in the dividend growth model? Discuss.