a and b

Your broker has just sent you details of a new share offer in a hand sanitiser business. She has indicated that the business just paid its annual dividend of $2.24 per share. She believes dividends are expected to grow at 2% p.a. a. [6 marks] If you wish a return of 6% p.a. on your investment, what is the maximum price you would be willing to pay for each share? b. [4 marks] Your broker tells you that the business has priced its shares at $142. What annual rate of growth does the company expect its dividends to grow at? (Assume a market valuation rate of 6% pa. give your answer to two decimal places.) Include with both answers a fully labelled cash flow diagram (drawn from the company's perspective), your chosen valuation date and equations of value