Computation of intrinsic price of share

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Reference no: EM13825804

Problem:

The dividend payments for a listed company are expected to grow at 2% per year. The current dividend is $1 per share. Suppose the investors' required rate of return is 5% per annum.

(a) Calculate the intrinsic price of the share.

(b) If the market price is $35 per share, would you buy shares in the company? Explain your answer.

Additional Information:

This question basically belongs to the Finance as well as it explains about computation of intrinsic price of share and whether or not one would buy the share for $35.

Reference no: EM13825804

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