## [answered] Beta Ltd just paid a dividend of \$0.40 and dividends are pa

?Beta Ltd just paid a dividend of \$0.40 and dividends are paid once a year. Dividends are expected to grow at 4% p.a. for each of the next five years and then to remain constant forever. Assume a required rate of return of 7% p.a., and that dividends are paid at the end of each year. Determine the fair value of Beta Ltd stock.?

a) Present Value of Cash flow upto year 5:

Year

Dividend Discount factor @ 7%

Present Value

1

0.42

0.935

0.39

2

0.43

0.873

0.38

3

0.45

0.816

0.37

4

0.47

0.763

0.36

5

0.49

0.713

0.35

1.84 b) Present...

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