7.26) Gerald Neut owns shares in Patina Pty Ltd. Currently, the market price of the share is $36.34. The company expects to grow at a constant rate of 6 per cent for the foreseeable future. Its last dividend was worth $3.25. Gerald's required rate of return for such shares is 16 per cent. He wants to find out whether he should sell his shares or add to his holdings.

a) What is the value of this share?

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b) Based on your answer to part a, should Gerald buy additional shares in Patina Pty Ltd? Why or why not?

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