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A company is expected to pay a dividend of R 1 0 . 5 0 per share in one year s time. The earnings and

A company is expected to pay a dividend of R

10.50

per share in one year

s time. The earnings and dividends are expected to grow at a rate of

7 %

in perpetuity.

Required:

If the company

s ordinary share price is currently R

60,

determine what is the company

s cost of equity?

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