Calculate how much a rational investor who valued only

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Reference no: EM133373402

Question: Glimmer Plc. is planning on making the following payments to shareholders in the form of cash dividends. The firm has 2m shares. The total dividends in the next 3 years are expected to; Year Dividend Payment (Total) 2018 £360,000 2019 £380,000 2020 £410,000 From 2021, the dividend per share is expected to be £0.22 and this is to grow at 3% per annum. Assume that the date is 1st January 2018, and the first dividend is due today. The next dividend, for 1st January 2019 is due in exactly one years' time. The risk-free rate of return in the economy is currently 2% and the return on market assets is equal to 10% per annum. The firm has assets which are riskier than that of the market portfolio and the firm has no debt. The assets beta is equal to 1.2.

Required: a) Calculate how much a rational investor who valued only dividends would pay for the shares of Glimmer Plc.

Reference no: EM133373402

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