3. Constant grovth rates One of the most important components of stock valuabon is a firm's estumated $ cath rate. Financial statements provide the inform aimon mestiot to estimate the growth rate. Consider this case: Robert Gillman, an equity research analyst at Gilman Advesors, befieves in efficent makets. He has been tilliuang the maning intastr. for the past 10 vears and needs to determine the constant gromth rate that he should ase ahile valuing Pan Asia Mins Ca. Robert has the following information available: - Pan Asaa Mining Co.'s stock (Tidker= PAMC) is trading at $2250. - The compary has forccasted net incorme and book valie af ecuaty for the coning vean ta be 51.420.200 and 511,115,000. respectively - The company has also been paying dividends for the past eight years. and has -anuined a uidend parcut rato at 45.000000% Based on this information, Robert's forecast of PAMC's growth rate in earnings and dividends should be: 8.62% 28.75% 31.95% 703% Which of the following statements accurately describes the relationship between earrings and dividends when all other factors are held coristant? Retaining a higher percentage of earnings will result in a higher growth rate. Long-tun earnings growth occurs primarily because firms pay dividends to reward their shareholders for irreating in the company Growth in earnings requires growth in dividends