Question 12.19: Assume that CDC Ltd has a constant dividend payout and the c...
Assume that CDC Ltd has a constant dividend payout and the cost of ordinary share capital is estimated at 12 per cent. Calculate the value of an ordinary share in the busi-ness using the discounted dividend approach.
The value of an ordinary share using the discounted dividend approach will be:
P_{0} = \frac{0.5 (\text{that is}, 1.0 m/2.0 m)}{0.12}
= £4.17
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