Dividend Growth Expected by a Market


Investors expect the following series of dividends from a particular ordinary share:

Year 1 $1.10

Year 2 $1.25

Year 3 $1.45

Year 4 $1.60

Year 5 $1.75

After the fifth year, dividends will grow at a constant rate. If the required rate of return on this equity is 9% and the current market price is $45.64.

What is the long-term rate of dividend growth expected by the market?



The question belongs to Finance and it discusses about expected dividend growth by market in share valuation.


Total Word Count 25





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