Assume That XYZ Ltd Has a Current Growth Rate of 10

question 6

Multiple Choice

Assume that XYZ Ltd has a current growth rate of 10% p.a.that is expected to be maintained for only another three years and then fall to 5% p.a. ,where it is expected to remain indefinitely.Given that the required return on ABC's shares is 12% and that the last dividend of 50 cents has just been paid,the price of ABC's shares will be:

• A)$8.56.
• B)$11.43.
• C)$10.25.
• D)$9.82.