Question 11 1 pts The earnings and dividends of MCL Ltd. are expected to grow at a constant annual rate over the foreseeable future. MCL's has recently paid a dividend per share of $1.30, and the required rate of return on the shares is 12% p.a. Based on this information, the current price of MCL's shares has been estimated at $26.00. The constant annual growth rate in dividends that is implied by this information is closest to: ? 5.00%. ? 5.33%. ? 7.00%. ? 6.67%.
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30 Current Price = $26.00 Dividend Growth Rate = ($1.30 / $26.00) - 1 Dividend Growth Rate = 0.05 - 1 Dividend Growth Rate = -0.95 However, since the question states that the earnings and dividends are expected to grow at a constant annual rate, the dividend Show more…
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