What should armadillo share price be

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Reference no: EM132583833

Armadillo Engineering is a newly listed company that is expected to pay its first dividend of $2.00 in Year 5. Thereafter, the annual dividend is expected to grow at 5% p.a. for the next 5 years, until year 10. From Year 11 onwards, the dividend is expected to grow at 2% p.a., in perpetuity.

Question 1: What should Armadillo's share price be, if the return required by its shareholders is 12% p.a.? (Enter the answer as a numerical value rounded to the nearest cent. For example, if the answer is $12.34, you should enter 12.34.)

Reference no: EM132583833

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