Math  /  Word Problems

QuestionFind the market value of Lawrence's shares given a \$1.80 dividend and an 11% return with varying growth rates.

Studdy Solution
The market value of the shares is the sum of the present value of the dividends for the first3 years and the present value of the perpetuity.
MarketValue=PV(D3)+PV(Perpetuity0)Market\, Value = PV(D_{-3}) + PV(Perpetuity0)Substitute the values of PV(D3)PV(D_{-3}) and PV(Perpetuity0)PV(Perpetuity0) into this equation to find the market value for each scenario.

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