The following information relates to the acquisition of M plc by D plc: Recent dividend of M plc: 20p per share Expected dividend growth of M plc: 3% per year Cost of equity of D plc: 10% Number of shares of D plc: 20 million Cost of equity of M plc: 8% Number of shares of M plc: 15 million What is the market value suggested by the dividend valuation model?
The following information relates to the acquisition of M plc by D plc: Recent dividend of M plc: 20p per share Expected dividend growth of M plc: 3% per year Cost of equity of D plc: 10% Number of shares of D plc: 20 million Cost of equity of M plc: 8% Number of shares of M plc: 15 million What is the market value suggested by the dividend valuation model?
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 5P
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The following information relates to the acquisition of M plc by D plc:
Recent dividend of M plc: 20p per share
Expected dividend growth of M plc: 3% per year
Number of shares of D plc: 20 million
Cost of equity of M plc: 8%
Number of shares of M plc: 15 million
What is the market value suggested by the dividend valuation model?
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