question archive A Berhad just paid dividend of RM 2 on its stock
A Berhad just paid dividend of RM 2 on its stock
Subject:AccountingPrice: Bought3
A Berhad just paid dividend of RM 2 on its stock. Below are the expected growth of dividend per share from year 1 to year 4. At year 5, dividend is expected to grow 5% per year, indefinitely. The beta of the company is 1.2. Market risk premium is 10% and risk free rate is 3 %. Calculate the current fair value of PA Berhad stock. If the market price of the share is RM18, should you buy the stock?
Year
Growth of dividend per share
1
10%
2
0%
3
12%
4
-2%
