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Kathleen Ferrero is interested in purchasing the ordinary shares of Vespertine Pty Ltd which are currently priced at $39.96. The company expects to pay a
Kathleen Ferrero is interested in purchasing the ordinary shares of Vespertine Pty Ltd which are currently priced at $39.96. The company expects to pay a dividend of $2.58 next year and expects to grow at a constant rate of 8 per cent. a What should the market value of the share be if the required rate of return is 14 per cent? b Is this a good buy? Why or why not?
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