Question 19 A company currently pays a dividend of R2 per share. It is estimated that the company dividend will grow at a rate of 20% per year for the next 2 years and at a constant rate of 7%...

Question 19

A company currently pays a dividend of R2 per share. It is estimated that the company dividend will grow at a rate of 20% per year for the next 2 years and at a constant rate of 7% thereafter. The company’s share has a beta of 1,2. The risk-free rate is 7,5% and the market risk premium is 4%. What is your estimate of the share’s current price?

1. R50,52

2. R51,08

3. R56,76

4. R58,14