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7. Constant growth rates One of the most important components of stock valuation is a firrn's estimated growth rate. Financial statements provide the information needed to estimate the growth rate. Consider this case: Robert Giliman, an equity research analyst at Giilman Advisers, believes In efficient markets. He has been following the mining industry for the past 10 years and needs to determine the constant growth rate that he should use while vaiuing Pan Asia Mining Co. Robert has the following information available: . Pan Asia Mining Co.'s stock (Ticker: PAMC) is trading at $22.50. a The company's stock is expected to pay a year-end dividend of $1.08 that is expected to grow at a certain rate. . The stock's expected rate of return is 10.80%. Based on the information just given, what will be Robert's forecast of PAMC's growth rate? Q 9.00% O 10.75% C 6.00% O 4.93% Which of the following statements accurately describes the relationship between earnings and dividends when aii other factors are held constant? 0 Longrun earnings growth occurs primarily because rms retain earnings and reinvest them in the business- 0 Paying a higher percentage of earnings as dividends wiii rault in a higher growth rate. 0 Dividend growth and earnings growth are unrelated