Assume Luna Ltd Pays a Mixture of Both Franked and Unfranked

Assume Luna Ltd pays a mixture of both franked and unfranked dividends.The current dividend just paid is $0.80,of which 40% is franked.The expected constant growth rate is 5% and the estimated cost of capital is 9%.Given a corporate tax rate of 30%,what is the present value of one share in Luna Ltd?

A) $\$ 19.74$
B) $\$ 21.48$
C) $\$ 24.68$
D) $\$ 25.73$

Correct Answer:

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