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12 . ( a ) Companies should use retained earnings to finance new projects because they are free Discus point ( b ) A company

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12 . ( a ) Companies should use retained earnings to finance new projects because they are free Discus point ( b ) A company has a share value of El 27 ( ex - div ) and has recently paid a dividend of Sp per share . If dividend growth is expected to be approximately 3 per cent pa into the foreseeable future , calculate the cost of equity

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