3) You are a security analyst evaluating Diamond Ltds Ordinary shares. Diamond Ltd just paid a $1.50 dividend in July 2020. Due to expected global recession because of COVID 19 Pandemic you believe the next years (2021) dividend will decrease by 10% before increasing again by 8% a year for each of the following 2 years (2022 and 2023). You expect the growth rate of dividends will then settle down to 5% a year indefinitely. If your required return for this share is 12% explain with calculation how much will you be willing to pay for the share. (Show answers correct to the nearer cent) 5 Marks

4) Falcon Ltd is considering a new project that is expected to provide the following after tax cash flows: Year Cash Flow 0 90,000 1 30,000 2 25,000 3 45,000 4 22,000 Falcon requires 11% pa required rate of return. Recommend if the company should accept the project or not by calculating the Net Present Value (NPV) of the Project (show answer correct to the nearer cent) and the Present Value Indices or benefit/cost ratio of the Project (show answer correct to four decimal points). 5 Marks