We Are Life Limited (WALL) has done it again by creating a vaccine for the novel corona virus. WALL is expected to pay a divideend of $2.45 next year after which dividends should enjoy growth of 15% for 2 years. Dividend growth is then expected to fall to 7% for 1 year before settling at a constant growth of 4% for the foreseeable future. The cost of capital is 24%. i)Calcuate WALL's share price today (P0). ii)Calculate the expected share price three years from today (P3). ii) Calculate the dividend yield for year 4.
Part A
We Are Life Limited (WALL) has done it again by creating a vaccine for the novel corona virus. WALL is expected to pay a divideend of $2.45 next year after which dividends should enjoy growth of 15% for 2 years. Dividend growth is then expected to fall to 7% for 1 year before settling at a constant growth of 4% for the foreseeable future. The cost of capital is 24%.
i)Calcuate WALL's share price today (P0).
ii)Calculate the expected share price three years from today (P3).
ii) Calculate the dividend yield for year 4.
PART B
Cohen and Company Limited (CAC) has three
Name Dividends yield
Series X 8.0% 10.5%
Series Y 7.2% 9.8%
Series 2 6.5% 11.1%
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