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Find what is maximum price per share that an investor

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AstraZenaca paid a dividend of $4.40 does not expect any growth The firm expects a 3.5% growth in years 2, 3 and 4 last year and in the next year. , 17% growth in year 5 and then grows at a constant rate of 11% per year.

Problem a. What is the maximum price per share that an investor who requires a return of 15% should pay for AstraZenaca's shares?

Problem b. Assume that the company expects to pay no dividends for the next 7 years. It has projected a growth rate of 22 per cent over the first 8 years. After 8 years, the company will grow at a constant rate of 4.5 per cent. Its first dividend to be paid in year 8 will be worth $2.25. If the required rate of return is 26.5 per cent, what is the share worth today?

Reference no: EM132917853

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