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What should be the value of leduc shares

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Reference no: EM132609261

Leduc Industries is a major engineering company in Winnipeg. It is expected to pay a dividend of $2.30 in one year's time. The company's earnings and dividends are expected to grow at 5% a year for the foreseeable future.

Question a. If the current price of Leduc's shares is $25 what is the required rate of return for investors?

Question b. If Leduc expects zero growth in the dividend and $2.30 is the future level of the dividend what should be the value of Leduc's shares?

Reference no: EM132609261

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