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MC Question 10
SKV Co has paid the following dividends per share in recent years:
The dividend for 20X4 has just been paid and SKV Co has a cost of equity of 12%.
| Year | 20X4 | 20X3 | 20X2 | 20X1 |
|---|---|---|---|---|
| Dividend ($ per share) | 0·360 | 0·338 | 0·328 | 0·311 |
Using the geometric average historical dividend growth rate and the dividend growth model, what is the market price of SKV Co shares on an ex dividend basis?
A. $4·67
B. $5·14
C. $5·40
D. $6·97