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Question 6  DDM

For a price of $102, Andrea will sell you a share which just paid a dividend of $10 yesterday, and is expected to pay dividends every year forever, growing at a rate of 5% pa.

So the next dividend will be 10(1+0.05)1=$10.50 in one year from now, and the year after it will be 10(1+0.05)2=11.025 and so on.

The required return of the stock is 15% pa.

Would you like to the share or politely ?