Differences between ordinary shares and preference shares

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Reference no: EM131553981

State two differences between ordinary shares and preference shares An ordinary share pays annual dividends.

An annual dividend of £5 has just been paid. Dividends are expected to grow at a compound rate of 2% per annum for the first 20 years. After 20 years, the annual dividends will stop.

Find, to the nearest pound, the value of the share assuming a rate of interest of 4% per annum effective.

Reference no: EM131553981

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