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The parts a), b), c) and d) below are independent questions which do not relate to each other. c) An ordinary share will pay an
The parts a), b), c) and d) below are independent questions which do not relate to each other.
c) An ordinary share will pay an annual dividend of $2.50 in 1 year. If the share price is worth $45 today. The rate of return is 8% p.a. It is expected that the annual dividend will grow at a constant annual growth rate for the foreseeable future. Calculate the annual growth rate to support the current market price. Round your answer to the nearest 0.01%. (2 marks)
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