2. (5 marks) Suppose that the last dividend paid on RBC share is $10. The dividends are expected to grow at a rapid grow

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2 5 Marks Suppose That The Last Dividend Paid On Rbc Share Is 10 The Dividends Are Expected To Grow At A Rapid Grow 1 (62.71 KiB) Viewed 25 times

2. (5 marks) Suppose that the last dividend paid on RBC share is $10. The dividends are expected to grow at a rapid growth rate of 8% over the next three yeas, and then at a constant growth rate of 5% thereafter. Your financial analyst managed to collect the following date on TD share (a similar stock at the same risk class): Scenario Probability Rate od return on TD Bust 0.5 -14% Boom 0.5 38% Answer the following questions: a. (4 marks) Determine the fundamental market price of RBC. b. (1 mark) Calculate the dividend yield.