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8) A fast growth share has the first dividend (t=1) of $1.07. Dividends are then expected to grow at a rate of 6 percent p.a.
8)
A fast growth share has the first dividend (t=1) of $1.07. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 3 years. It then will settle to a constant-growth rate of 2.8 percent. . If the required rate of return is 18 percent, what is the current price of the share? (to the nearest cent)
a.
$7.56
b.
$7.04
c.
$20.55
d.
$5.43
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