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( 2 ) Suppose the firm has historically earned 1 5 % on equity ( ROE ) and paid 6 2 % of earnings, and

(2) Suppose the firm has historically earned 15% on equity (ROE) and paid 62% of earnings, and suppose investors expect similar values to obtain in the future. How could you use this information to estimate the future dividend growth rate, and what growth rate would you get? Is this consistent with the 5.8% growth rate given earlier?

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