Sign up  |  Log in

Required rate of return=growth rate? CBOK Reading 30 practise question 41 (2018 edition)


For the question on Venus company, in particular question 41 of CBOK

Exhibit 2, scenario 2 shows the growth rate of dividends; but the question does not explicitly state the required rate of return that would be required to calculate the terminal value. In the answer, the terminal value is calculated using 8% which is the beginning growth rate.

Is the beginning growth rate = to the required rate of return?


Drill all the fundamentals with Wiley's CFA experts Peter Olinto, Darren Degraaf and others.

Nope, you may be forgetting some data. Perhaps you have to calculate the required rate of return in first place. Double check it or write the question here!

Las almas de todos los hombres son inmortales, pero las almas de los justos son inmortales y divinas.