• June 25, 2021

N1 RALL PARTS OF THIS QUESTION GetFair plc is not expected to pay dividends in the next four years. In year 5, it is expected to pay a dividend of f3 per share. Dividends are expected to be maintained at this level for the foreseeable future thereafter. Assume investors require a return of 8 per cent. What is each of GetFair shares currently worth? [6 marks] D. Macrosoftware plc is a young start-up company. No dividends will be paid on its stock over the next 7 years because the firm intends to reinvest all its earnings to generate growth. The company will then pay a f1 per share dividend in year 8 and will increase the dividend by 4 per cent per year thereafter. If the required return on this stock is 9 per cent, what is the current share price? [8 marks]c. Castlebank plc is trading at E5125 per share. The stock currently pays dividend of2.50 per share. Assuming that the expected growth in dividends will be 5% a year forever, estimate the return that you can expect to make as an equity investor in this stock [6 marks] d. What is the value of a share in a company that currently pays out E1.00 per share in dividends and expects these dividends to grow at 15 per cent a year for the next 5 years and per cent a year forever after that? (You should assume that investors require 12.5 per cent return on stocks of equivalent risk.)