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Question 7.11 Ordinary share value – constant growth – GC Cellular has paid the dividends shown...

Question 7.11

Ordinary share value – constant growth – GC Cellular has paid the dividends shown in the

Following table over the past six years

Year

Dividend per share

2015

R2.87

2014

2.76

2013

2.60

2012

2.46

2011

2.37

2010

2.25

The firm’s dividend per share next year is expected to be R3.02

a.If you can earn 13% on similar-risk investments what is the most you would be willing to pay per share?

b.If you can earn only 10% on similar risk investments, what is the most you would be willing to pay per share?

c.Compare and contrast your findings in part a and b and discuss the impact of changing risk on share value

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