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hi im kind of confused how to undertake these 2 questions, for the first question would it be as simple as using div/r-g? Question 3

hi im kind of confused how to undertake these 2 questions, for the first question would it be as simple as using div/r-g?

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Question 3 (10 Marks) a) Suppose SNAP does not expect to pay a dividend for the next three years. After that (year 4) it expects to pay $5.80 per share. The dividend is expected to grow at 3.5% per annum indefinitely. Assume that we can value the SNAP shares using the present value of dividends. If the SNAP shares have a required return of 20% per annum, what is the value of the share? (to nearest cent) (4 marks) b) XYZ ordinary shares currently trade at $6.00. The company's shareholders require a return of 18% p.a.. If the company just paid a dividend of $0.70, according to the constant growth Dividend Discount Model (DDM), what is the expected annual growth rate in dividends? (Answer as a percentage to decimal places)

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