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1. An issue of common stock paid dividend of RM5.80 last year. Its growth rate is equal to 6%. If the required rate of return
1. An issue of common stock paid dividend of RM5.80 last year. Its growth rate is equal to 6%. If the required rate of return is 13%, what is its current price? 2 marks 2. The Memerang Company's last dividend was RM3.50. The dividend growth rate is expected to be constant at 12% for 4 years, after which dividends are expected to grow at a rate of 4% forever. If Memerang's required return (rs) is 12%, what is the company's current stock price? 9 marks 3. Hong Manufacturing is expected to pay a dividend of RM1.00 per share at the end of the year (D1 = RM1.20). The stock sells for RM42 per share, and its required rate of return is 12%. The dividend is expected to grow at a constant rate, g, forever. What is Hong's expected growth rate? 3 marks 4. The Mohawk Company's bonds mature in 15 years have a par value of RM1,000 and an annual coupon 7%. The market interest rate for the bonds is 9%. What is the price of these bonds? 3 marks 5. Babu Enterprises' bonds currently sell for RM1,135. They have a 10-year maturity, an annual coupon of RM40, and a par value of RM1,200. What is their yield to maturity? 3 marks
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