Part (a) You are considering the purchase of AMDEX Company shares. You anticipate that the company will pay dividends of $2.00 per share next year and $2.25 per share the following year. You believe that you can sell shares for $17.50 each two years from now ex-dividend. If your required rate of return is 12 percent, what is the maximum price that you would pay for a share?
Part (b) Describe and contrast the following ordinary share dividend valuation models: (i) zero growth, (ii) constant growth, and (iii) mixed growth.