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23 June, 16:59

Taggart Transcontinental has a divided yield of 3.5%. Taggart's equity cost of capital is 10%, and its dividends are expected to grow at a constant rate. Based on this information, Taggart's constant growth rate in dividends is closest to:

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  1. 23 June, 17:13
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    Taggart's constant growth rate in dividends is closest to: 6.5%

    Solution:

    Given,

    Taggart Transcontinental has a divided yield of 3.5%

    Equity cost of capital = 10%

    To Find: Taggart's constant growth rate in dividends

    So, we need to calculate:

    = > 10% - 3.5% = 6.5%

    Taggart's constant growth rate in dividends is closest to: 6.5%
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