Dally Rex a clothing stores predict a high growth rate of 45 per cent for the next 2 years, followed

Question:

Dally Rex a clothing stores predict a high growth rate of 45 per cent for the next 2 years, followed by growth rates of 25 per cent and 20 per cent for the following 2 years respectively. It clothing store expects to stabilise its growth to a constant rate of 7.5 per cent for the next several years. The company paid a dividend of $4.90 recently.

If the required rate of return is 12 per cent, what is the current market price of the share?

Expert Answer:

Answer rating: 100% (QA)

To calculate the current market price of the share we can use the dividend discount model DDM or the

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