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Calculate estimated value today for buynow shares

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Reference no: EM132687663

A client has requested you analyse share investment options for them and provide a recommendation on which opportunity to invest in. They have told you they have a required return of 8%.

They also provide the following information about the two shares:

  1. BuyNow limited pays an annual dividend of $2.70 and expects to pay annual dividends at this level into the future. BuyNow shares are currently trading at a price of $30.60
  2. Paylater Limited just paid an annual dividend of $1.75 with dividends expected to grow at 6%p.a. Paylater shares are currently trading at a price of $97.80

Problem a) Calculate your estimated value today for BuyNow Shares.

Problem b) Calculate your estimated value today for Paylater Shares

Problem c) Which shares would you recommend they buy and why?

Reference no: EM132687663

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