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What is the shareholder required rate of return

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Question - Shares in PQR are currently trading for $12.25. The company is not expected to pay a dividend for the next four years. At the end of year 5, it is expected to pay a dividend of $1.00 per share, which will grow at 2% p.a. in perpetuity. What is the shareholder's required rate of return?

a. 8% p.a.

b. 7.5% p.a.

c. 7% p.a.

d. 6.5% p.a.

e. None of the other answers is correct

Reference no: EM132603798

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