What must be the expected growth rate of the company

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1. Mrs. Brown is considering setting up a college fund for her grandson. Mrs. Brown wants to pay her grandson's tuition fees of $5,000 each year for four years. Assume that she saves an equal amount each year, and the first deposit is made one year from now. Interest rates will remain constant at 8 percent. How much must Mrs. Brown save each year? Assume her grandson will go to college in 18 years and tuition fees are paid once a year at the beginning of the year.

2. Lincoln and Donovan's will pay a dividend of $5 per share in year 1. It sells at $60 a share, and firms in the same industry provide an expected rate of return of 14 percent. What must be the expected growth rate of the company's dividend?

Reference no: EM132234698

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