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Currently, a company has a beta of 1.3 and constant growth rate in earnings and dividends of 6%. The company is considering undertaking a new
Currently, a company has a beta of 1.3 and constant growth rate in earnings and dividends of 6%. The company is considering undertaking a new project. With the new project the beta and growth rate would fall to 0.9 and 3% respectively. The last dividend paid is RM2. Assume the risk-free rate is 5% and market return is 10%. Should the project be accepted? (6 marks)
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