What should the share price be today

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Problem 1: Pelosi will pay a dividend of 25 pesos next year. The dividend is expected to increase at an annual rate of 15% for the next three years. For five years after that, the dividend will increase at 6% per year. Thereafter (from year 10 onwards), the dividend growth rate will slow to 2% per annum, which should be the annual dividend growth rate thereafter. The cost of equity capital is 12%, the interest rate on debt is 6% and the tax rate is 25%. 80% of Paolozzi's equity is financed. What should the share price be today?

Reference no: EM132970701

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