What price would advise the owners of the firm

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Problem 1: Intrepid Adventures Pty is considering an IPO, and you have been hired to advise the firm's owners on an appropriate listing price for its shares. The firm is expected to pay its first dividend of $1.50 per share in 5 years' time. It should then pay dividends of $2.00 and $2.50 per share in the following two years. Thereafter, the dividend is expected to grow at 1.5% p.a. in perpetuity. At what price would you advise the owners of the firm to issue the shares, assuming a required rate of return of 8% p.a?

Option 1: $26.52

Option 2: $24.72

Option 3: $28.46

Option 4: $21.97

Reference no: EM132623696

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