Question
Broken just paid annual dividends of R2, has beta of 1.3, and a growth rate of 6% for the foreseeable future. The current return on
Broken just paid annual dividends of R2, has beta of 1.3, and a growth rate of 6% for the foreseeable future. The current return on the market is 10%, and Treasury bills earn 4%.
Required:
If the rate on Treasury bills drops by 0.50% and market premium increases by 1.0%, what growth rate would keep Broken's stock price constant?
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Management Accounting Information for creating and managing value
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne
8th edition
9781760420413 , 978-1760420406
