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DIVIDEND DISCOUNT MODEL 5 MARKS Salmond plc has a dividend yield of 5.5% and cost of equity capital of 10%. The dividends of Salmon plc

DIVIDEND DISCOUNT MODEL 5 MARKS

Salmond plc has a dividend yield of 5.5% and cost of equity capital of 10%. The dividends of Salmon plc are expected to grow at a constant rate indefinitely.

Required:

A. Estimate, the growth rate of Salmond's dividends (2 marks)

B. Detail the limitations of using the dividend discount model for equity valuation (3 marks)

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