Estimate the price of an ep share

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i) English Petroleum's (EP) shares pay 30p of dividends annually, assume that this dividend will be paid every year forever and current market interest rates are 2%. The first dividend will be paid in a year's time. Estimate the price of an EP share.

ii) An innovation exclusive to EP has suddenly meant that EP will make higher profits. The dividend paid in 1 year's time will still be 30p per share, however from the second year onwards, the dividend will grow by 0.5% every ear. this growth will be sustained. Estimate the price of an EP share.

Reference no: EM132299167

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