Unformatted text preview: $41.80105/$296.71803 = 14.087802% of the total profit. 2 (vi). The amount you earned as reinvestment income is $296.71803 – $93.75 – $41.80105 = $161.16698. It forms $161.16698/$296.71803 = 54.316545% of the total profit. 3 (i). Given that D 1 = $2, r = 13.5% = 0.135, and g = 9.5% = 0.095, we can work out that P = $2/(0.135 – 0.095) = $50. 3 (ii). Given that P = $100, D 1 = $4, and r = 0.15, we can work out that g = r – D 1 /P = 0.15 – $4/$100 = 0.11 = 11%. 3 (iii). Given that P = $120, r = 20% = 0.2,and g = 16% = 0.16, we can work out that D 1 = P *(r – g) = $120*(0.2 – 0.16) = $4.80....
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 Winter '08
 LI,C.
 $50, 0.5%, total profit, 0.25%, $4.80

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