3/9 SULIT/CONFIDENTIAL BD20403 a. 1. ii. Question 2 Mr. Murad, a retired army officer, plans to invest some money in ordinary stocks. If he expects a return of 14 percent from his investment. What will be the value of the stock based on the following conditions? Current dividend RM0.95, constant growth rate of dividend 6 percent. (4 marks) Current dividend RM1.12, constant growth rate of dividend 7 percent. (4 marks) Current dividend RM1.00, constant growth rate of dividend 5 percent, and he revised his required rate of return to 9 percent. (4 marks) iv. If he requires a return of 12 percent and the current market value of the stock is RM36.00. Ww he think this stock is attractive? (4 marks) b. Tongkah Bhd is a high growth company. Its current dividend of RM2.00 per stock and the dividend is expected to grow at a rapid rate of 30 percent a year for the next 3 years. Thereafter, dividend growth will slow down to 7 percent a year for the indefinite future. Il investors want a required rate of return of 20 percent calculate the stock intrinsic value? (9 marks) TOTAL 25 MARKS 4/9 BD20403 SULIT/CONFIDENTIAL 3/9 SULIT/CONFIDENTIAL BD20403 a. 1. ii. Question 2 Mr. Murad, a retired army officer, plans to invest some money in ordinary stocks. If he expects a return of 14 percent from his investment. What will be the value of the stock based on the following conditions? Current dividend RM0.95, constant growth rate of dividend 6 percent. (4 marks) Current dividend RM1.12, constant growth rate of dividend 7 percent. (4 marks) Current dividend RM1.00, constant growth rate of dividend 5 percent, and he revised his required rate of return to 9 percent. (4 marks) iv. If he requires a return of 12 percent and the current market value of the stock is RM36.00. Ww he think this stock is attractive? (4 marks) b. Tongkah Bhd is a high growth company. Its current dividend of RM2.00 per stock and the dividend is expected to grow at a rapid rate of 30 percent a year for the next 3 years. Thereafter, dividend growth will slow down to 7 percent a year for the indefinite future. Il investors want a required rate of return of 20 percent calculate the stock intrinsic value? (9 marks) TOTAL 25 MARKS 4/9 BD20403 SULIT/CONFIDENTIAL