A share in IM will pay a dividend of £1.20 and has a current market price greater than £20. You also know that the expec

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A share in IM will pay a dividend of £1.20 and has a current market price greater than £20. You also know that the expec

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A Share In Im Will Pay A Dividend Of 1 20 And Has A Current Market Price Greater Than 20 You Also Know That The Expec 1
A Share In Im Will Pay A Dividend Of 1 20 And Has A Current Market Price Greater Than 20 You Also Know That The Expec 1 (44.74 KiB) Viewed 52 times
A share in IM will pay a dividend of £1.20 and has a current market price greater than £20. You also know that the expected return on the share is 8%. (i) Using DDM Model explain why this means that the dividend cannot be constant at £1.20 per share. (5 marks) (ii) You then discover that the dividend paid by IM will increase by 4% each year. Calculate the intrinsic value of a share in IM. (3 marks) (iii) If the dividend growth changed from 4% to 2% what would happen to the intrinsic value of the share in IM? (2 marks)
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