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Question 2 Mrs Green has 9,000 of savings and she is looking to invest in some shares of Company XYZ. The shares are expected to
Question 2 Mrs Green has 9,000 of savings and she is looking to invest in some shares of Company XYZ. The shares are expected to provide regular dividends paid annually in perpetuity. The next dividend is expected to be 3.60 and will be paid in 2 months' time. After this payment, dividends are expected to increase by 2% per annum on a compound basis. Shares of XYX can only be purchased in blocks of 10. Using an effective interest rate of 7% per annum, calculate the maximum number of shares that Mrs Green can buy with her savings. [Total 6 marks]
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