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Why the examiner used dividend growth rate?
Is it allowed to use dividend growth model to get the growth in PBIT? Is it right to do like this
How does co value is calculated?
Freecash flow will be multiplied by growth rate and discounted at Pv? Why did examiner subtracted 0.11-0.0206
No it is not right (and it is not the dividend growth model!). You calculate the growth rate in the same way as we do for dividends – i.e. taking the third root, not dividing by 3.
If there is growth in perpetuity (as there is here) then you cannot inflate the flows and discount each year – it is impossible when it is a perpetuity.
We use the dividend growth formula (as the examiner has done in his answer) – it can be used to get the present value of any inflating perpetuity.