Changes in Expected Return (Example) Homework Help


For the facts in Example 4.7, assuming that the expected rate of growth would increase from 7 to 9 per cent due to proposal to upgrade technology, compute the value of the share.



Thus, value of shares has increased from Rs 33.3 10 Rs 42.9. The increase is caused by the higher expected future return-dividends as reflected in the increase in the growth rate.

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