a Mr Ali is retired from his services recently and has invested in perpetuity stocks. Calculate the
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Question:
a Mr Ali is retired from his services recently and has invested in perpetuity stocks. Calculate the price of a perpetuity stock he must have paid if the dividend paid is $15 and expected return on the stock is 8%. Consider no growth.
b What effect growth does on dividends. Explain with respect to constant growth model. Give your answer in not more than three sentences.
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