1. ABC Limited will pay a $2.76 dividend next year (t=1) on its ordinary shares. The...

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1. ABC Limited will pay a $2.76 dividend next year (t=1) on itsordinary shares. The shares are currently selling at $64.01 pershare. What is the market's required return on this investment ifthe dividend is expected to grow at 3% forever? (as a percentage tonearest two decimal places; don't use % sign)
2. You are interested in investing in a company that expects togrow steadily at an annual rate of 2 percent for the foreseeablefuture. The company just paid a dividend of $4.58. If your requiredrate of return is 16 percent p.a., what is the most you would bewilling to pay for this share? (Round to the nearest cent; don'tuse $ sign.)
3. A company has just paid its annual dividend of $4.55yesterday, and it is unlikely to change the amount paid out infuture years. If the required rate of return is 14 percent p.a.,what is the share worth today? (to the nearest cent; don’t include$ sign)

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Solution to QUESTION1 Here weve Dividend per share D1 276 per share Current market price per share P0 6401 per share Dividend growth rate g 300 per year Under Constantgrowth See Answer

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1. ABC Limited will pay a $2.76 dividend next year (t=1) on itsordinary shares. The shares are currently selling at $64.01 pershare. What is the market's required return on this investment ifthe dividend is expected to grow at 3% forever? (as a percentage tonearest two decimal places; don't use % sign)2. You are interested in investing in a company that expects togrow steadily at an annual rate of 2 percent for the foreseeablefuture. The company just paid a dividend of $4.58. If your requiredrate of return is 16 percent p.a., what is the most you would bewilling to pay for this share? (Round to the nearest cent; don'tuse $ sign.)3. A company has just paid its annual dividend of $4.55yesterday, and it is unlikely to change the amount paid out infuture years. If the required rate of return is 14 percent p.a.,what is the share worth today? (to the nearest cent; don’t include$ sign)