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Sir, is it possible to have a negative growth ? ( Like -4%) ?
I know we probably wont get such a thing in the exam but what do we do if its negative?You certainly will never get negative growth in the exam.
It will not be the case in practice either. The growth rate used in the calculation of the cost of equity is not the actual growth rate but the rate of growth that investors are expecting in the future. If they were expecting negative growth then they would not be investing 🙂
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