Based on information given, Robert’s forecast of PAMC’s growth rate will be 11.4%.
Here, we are going to calculate Robert’s forecast of PAMC’s growth rate by using the information provided..
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- The formula to be deployed is Price = Dividend in 1 year/(cost of equity - growth rate)
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<u>Given Information</u>
Pan Asia Mining Co.’s stock is trading at $13.75
Expected year-end dividend = $0.66
Stock’s expected rate of return = 6.60%.
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<em>$</em>13.75 = $0.66 / (6.60% - Growth rate)
<em>$</em>13.75 = $0.66 / (0.066 - Growth rate)
<em>$</em>13.75*((0.066 - Growth rate) = $0.66
$0.9075 - $13.75(Growth rate) = $0.66
$13.75(Growth rate) = $0.66 + $0.9075
Growth rate = $1.5675 / $13.75
Growth rate = 0.114
Growth rate = 11.4%
Therefore, Robert’s forecast of PAMC’s growth rate will be 11.4%.
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<em>brainly.com/question/15517733</em>
