Question

Boom paid a dividend of 0.005 in 2020. Assume Boom will pay the same 2020 annual dividend amount in 2021, 2022, 2023 and 2024. The annual dividend in 2025 is predicted to be 50% higher than 2024's annual dividend and is then forecast to increase at an annual rate of 5%. If Boom's required return is 10%, what is a fair value for one Boom share in 2021, just after the 2021 dividend is paid. ​

Answer 1

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