The writer is very fast, professional and responded to the review request fast also. Thank you.
$2.00 $2.50 $2.90 $3.20 $3.60 Historical growth rate estimation
a. What is the compound growth rate of dividends based on the last five years of dividends data? (2 marks)
b. Calculate the year-to-year growth rates in dividends. (2 marks)
c. What is the average year-to-year dividend growth rate? (1 mark)
d. ABC has a retention ratio of 0.75 and a historical return on equity (ROE) of 0.2.
Using these two additional pieces of information, calculate an alternative estimate of dividend growth rate, g. (1 mark) Dividend growth model
e. Given that ABC’s share price is currently $65, and the most recent dividend paid is $3.60 per share, use the three growth rates estimated for historical growth (com- pound growth rate, average year-to-year growth rate, and alternative estimate) to calculate the cost of equity using the dividend growth model
How do you calculate the growth rate using the alternative estimate? I can not figure out to get the retention ratio and ROE from the information given.
Thank you
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more