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Basic Valuation John is interested in purchasing the ordinary shares of Blue Ltd, which are currently priced at R37.45. The company expects to pay a
Basic Valuation
John is interested in purchasing the ordinary shares of Blue Ltd, which are currently priced at R37.45. The company expects to pay a dividend of R2.58 next year and expects to grow at a constant rate of 7%.
a) What should be the market value of the shares, if the required rate of return is 14 %? Is this a good buy?
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