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Explain Harmony Corporation will pay a dividend of RM1.50 a share next year. Ater this, earnings and dividends are expected to grow at a 9%

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Explain Harmony Corporation will pay a dividend of RM1.50 a share next year. Ater this, earnings and dividends are expected to grow at a 9% annual rate indefinitely (10) Investors currently require a rate of return of 13%. The company is considering the following two business Strategies and wishes to determine the effect of these strategies on the market price per share of its stock. Strategy 1: Continuing the present strategy will result in the expected growth rate and required rate of return stated above Strategy 2: Expanding Harmony Corporation sales will increase the expected dividend growth rate to 11% but will increase the risk of the company. As a result, the rate of return required by Investors will increase to 16% From the standpoint of market price per share, which strategy is better? Show relevant workings to support your answer (10) Total Jumlah 20 )

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