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MegaCapital Ltd just paid a dividend of R1,40 per share and the share is in equilibrium. The company has a constant growth rate of 3%
MegaCapital Ltd just paid a dividend of R1,40 per share and the share is in equilibrium. The company has a constant growth rate of 3% and a beta equal to 0,60. The required rate of return on the market is 14%, and the risk-free rate is 5%. Mega is considering a change in policy which will increase its beta coefficient to 1,30. If market conditions remain unchanged, what new constant growth rate will cause the ordinary share price of Mega to remain unchanged?
Please assist with calculations?
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