10-7 and 10-8

Uck with an annual dividend of Rp300 per share and a price of What is the 40.5 a. Give a PicCU SUCR with an ar y Rp4,000, what is the required rate of retur b. Assume now that interest 10-6 An investor purchase these e now that interest rates rise, leading investors to demand a required rate of return of 9 percent. What will be the new price of this preferred stock? westor purchase the common stock of a well-known house builder, Mobile-8 Telecom for Rp2,500 per share. The expected dividend for the next year is Rp300 per share, and the investor is confident that the stock can be sold one year from now for Rp3,000. What is the implied required rate of return? 10-7 a. The current risk-free rate (RF) is 10 percent, and the expected return on the market for the coming year is 15 percent. Calculate the required rate of return for (1) stock A, with a beta of 1.0, (2) stock B, with a beta of 1.7, and (3) stock C, with a beta of 0.8. b. How would your answers change if RF in part (a) were to increase to 12 percent, with the other variables unchanged? C. How would your answer change if the expected return on the market changed to 17 percent, with the other variables unchanged? Inti Agri Resources Tbk. is currently selling for Rp6,000 and is paying a Rp300 dividend. a. If investor expect dividend to double in 12 years, what is the required rate of return for this stock? b. If investor expect dividend to approximately triple in six years, what would be the required rate of return? Indah Kiat Pulp & Paper Tbk. is currently selling for Rp3,600, paying Rp180 in dividends, and investors except dividends to grow at a constant rate of 8 percent a year, a. If an investor requires a rate of return of 14 percent for a stock with the riskiness of Indah Kiat Pulp & Paper Tbk., is it a good buy for this investor? 0-9