Suppose that the current cash dividend of Capri Ltd is $0.30.Financial analysts expect the dividends to grow at a constant rate of 7 per cent per year,and investors require a 15 per cent return on this class of shares.What should be the current share price of Capri?

Question

Quizplus · Accepted Answer

The correct answer is A because the current share price of Capri should be $4.01. This is calculated using the dividend discount model, which takes into account the current dividend, the expected growth rate of dividends, and the required return on the shares.

Suppose That the Current Cash Dividend of Capri Ltd Is