Lessitz Ltd currently pays a dividend of $0.85.Lessitz Ltd's estimated growth rate is 6.8%.Given a cost of capital of 9.00%,what is the PV of one share in Lessitz Ltd?

Name: Lessitz Ltd currently pays a dividend of $0.85.Lessitz Ltd's estimated growth rate is 6.8%.Given a cost of capital of 9.00%,what is the PV of one share in Lessitz Ltd?
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Question

Quizplus · Accepted Answer

Using equation 11.9,we can compute the PV of one share in Lessitz Ltd in the following way: PV = [0.85(1.068)]/[0.9 - 0.068] = $1.09.

Lessitz Ltd Currently Pays a Dividend of $0 $0.88 \$ 0.88 $0.88

Lessitz Ltd Currently Pays a Dividend of $0 $\$ 0.88$