b) Diamantis plc expects earnings of 6.25 per share at the end of this year,...
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b) Diamantis plc expects earnings of 6.25 per share at the end of this year, and plans to pay a dividend of 4.50 at that time. The retained earnings will be invested in projects with an expected return of 18% per year. Suppose Diamantis plc will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Estimate the growth rate of earnings for Diamantis plc. (6 marks) c) Extimate the share price, if the cost of equity capital for Diamantis plc is 14%
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