You Are Considering the Purchase of an Ordinary Share That

question 7

Multiple Choice

You are considering the purchase of an ordinary share that just paid a dividend of R2.00.You expect this share to have a growth rate of 30 percent for the next 3 years, then to have a long-run normal growth rate of 10 percent thereafter.If you require a 15 percent rate of return, how much should you be willing to pay for this share?

• A) R71.26
• B) R97.50
• C) R82.46
• D) R79.15
• E) R62.68

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Definitions:

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by a corresponding disdain for other groups.

Scarce Resources

A condition where the demand for resources exceeds the supply, leading to competition and conflict.

Sherif

Refers to Muzafer Sherif, a psychologist known for his work on social norms, and the realistic conflict theory.

Social Identities

The aspects of an individual's self-concept derived from perceived membership in social groups such as nationality, ethnicity, religion, or gender.