7. Constant growth rates ols One of the most important components of stock valuation is a firm's estimated growth rate Financial statements provide the information needed to estimate the growth rate A-Z Consider this case Robert Gilman an equity research analyst at Gilman Advisors, beleves inefficient markets. He has been following the mining in for the past 10 years and needs to determine the constant growth rate that he should use while valuing Pan Asia Mining Co Robert has the following information avalable: . Pan Asia Mining Co.'s stock (Ticker PAMC) is trading at $16.25 The company has forecasted net income and book value of equity for the coming year to be $1,025,700 and $8,027.00 respectively . The company has also been paying dividends for the past eight years and has maintained a dividend payout ratio of 32.500000 Based on this information, Robert's forecast of PAMC's growth rate in carnings and vidends should be 20,779 15.98% CA 8.62% KI 6,234 th Which of the following statements accurately describes the relationship between earnings and dividends when all other factors are held constant? Long-run earnings growth occurs primarily because firms retain earnings and reinvest them in the business. Dividend growth and earnings growth are unrelated Paying a higher percentage of earnings as dividends will result in a higher growth rate