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What should be the value of Leduc shares

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Reference no: EM132849599

Question - 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.

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

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: EM132849599

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