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- Topic: CFAI got it wrong on this question, or did I miss something?
| Author | Topic: CFAI got it wrong on this question, or did I miss something? |
|---|---|
| steven79 @2015-12-12 18:49:57 |
Reading 56 (P152 question 4). The question says "Over the long-run, you expect dividends for BBC in Problem 2 above to grow at 8% and u require 11% . . . . In 2 the dividends was correctly calculated as (1) last year to be $6 and (2) this year to be $6.6, if the required rate has been changed to 11% why is the solution for D1$6*1.08/0.03 instead of $6.6*1.08/0.03. My solution was $237,6. Did I miss something in the question or the solution. |
| myip @2015-12-16 18:53:58 |
I agree with you. I believe it's 6.6*1.08 on top, since you use the dividend for the period after the current one for the Gordon Growth Model. |
