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You have several investments. One of them is 500 shares in PUMA Oil. Puma is expected to pay a dividend next year of K2.38. The
You have several investments. One of them is 500 shares in PUMA Oil. Puma is expected to pay a dividend next year of K2.38. The expected growth rate of the dividends is 6% per year forever. Another of your investments is 600 shares in Madison, which has an expected growth rate in dividends of 4% per year forever. It sells for K51.875. It is expected to pay a dividend of K3.35 per share next year. Answer the below questions. a. If Puma is selling for K29.45 per share, What is your expected return for Puma and Madison (2 Marks) b. Which one of the two investments is superior and explain why. (1 Mark)
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