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Calculate your estimated value today for paylater shares

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Reference no: EM132733587

Question - 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:

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

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

Required -

a) Calculate your estimated value today for BuyNow Shares.

b) Calculate your estimated value today for Paylater Shares.

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

Reference no: EM132733587

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