Describe ordinary share dividend valuation models

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You are considering the purchase of AMDEX Company shares. You anticipate that the company will pay dividends of $2.00 per share next year and $2.25 per share the following year. You believe that you can sell shares for $17.50 each two years from now ex-dividend. If your required rate of return is 12 percent, what is the maximum price that you would pay for a share?

Describe and contrast the following ordinary share dividend valuation models: (i) zero growth, (ii) constant growth and (iii) mixed growth.

Reference no: EM132978957

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