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Compute the value of the stock today

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Question - Elite Berhad paid an annual dividend of RM0.90 per share this year. The company expects the dividend will grow at an annual rate of 15 percent for the next five years and then drop to a gradual growth rate of 7 percent indefinitely. The share is currently sold at RM48.00 and the required rate of return is 10 percent.

Required -

i. Compute the value of the stock today.

ii. Should you buy the share? Justify your decision.

Reference no: EM132834189

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