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Question 3 At Newton Space plc, the company's director mentioned that the utilisation of dividend discount models by investors is evidence that larger dividends result
Question 3 At Newton Space plc, the company's director mentioned that the utilisation of dividend discount models by investors is evidence that larger dividends result in equity prices which are higher. Required: Based upon a constant-growth dividend discount model, evaluate the director's statement. (4 marks) (b) Explain how a dividend payout increase will influence the following (ceteris peribus): (i) Growth rate which is sustainable (2 marks) I (ii) Book value which grows (2 marks)
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