Jindabyne Brewing Ltd (JBL)recently paid a dividend of $0.72.This dividend is expected to grow at a constant rate of 3% p.a.The company's shareholders require a return of 6% p.a.on their invested capital.Assuming that these figures are accurate what will be JBL's share price in two year's time?

Question

Quizplus · Accepted Answer

The correct answer is A because the share price in two years' time can be calculated using the formula:Share price = Dividend / (Required return - Dividend growth rate)= 0.72 / (0.06 - 0.03)= $26.23

Jindabyne Brewing Ltd (JBL)recently Paid a Dividend of $0