7. Constant growth rates 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 Consider this case: Robert Giliman, an equity research analyst at Gillman Advisors, believes in efficient markets. He has been following the mining industry 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 available: Pon Asia Mining Co. 3 stock (Ticker: PAMC) is trading at $18.75 The company's stock is expected to pay a year-end dividend of $0.90 that is expected to grow at a certain rate. The stock's expected rate of return is 9.00% Based on the information just given, what will be Robert's forecast of PAMC's growth rate 4,20% 6.30 3.49 Based on the information Just Given, what will be Robert's forecast of PCs growth rate 4,20% 06.30% 3.49% 5.95% Wluch of the following statements accurately describes the relationship between cornings and dividends when all other factors are held constant? O Longrun earnings growth occurs primanly because time pay dividends to reward their shareholders for investing in the company O Growth in earnings requires growth in dividends Retaining a lagher percentage of earnings will result in a higher growth rate