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How much will you pay for the company share

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Question -

a. Briefly discuss the relationship between the following: i. Share price and investors required rate of return ii. Share price and divided growth rate.

b. Otama LTD has an issue of preference shares outstanding that pays a $2.85 divided every year. If this issue currently sells for $77.32 per share, what is the required return?

c. Price Tigers LTD expects to pay a $3.25 per share dividend next year. The company pledges to increase its dividend by 5.1% per year, indefinitely. If you require a return of 11% on your investment, how much will you pay for the company's share?

Reference no: EM132570132

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