BUS 310 – Polycorp has a dividend of $5.00 due in a year’s time and is expected

BUS 310 – Polycorp has a dividend of $5.00 due in a year’s time and is expected

Polycorp has a dividend of $5.00 due in a year’s time and is expected to pay a dividend $5.60 at the end of the second year. Its dividend is expected to grow at 7% pa for the following two year. Dividends are then expected to grow at 4% pa for another two years, after which they are expected to grow at 3%pa forever. Shareholders required return on equity is 11% pa. What is the current price (ex-dividend) of Polycorp shares? D0 is $4.


Price: £ 59

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