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(a) A common stock just paid a dividend of RM0.50. The dividend is expected to grow at 6 percent for 4 years, it will grow
(a) A common stock just paid a dividend of RM0.50. The dividend is expected to grow at 6 percent for 4 years, it will grow at 4 percent in perpetuity. The required rate of return is 9 percent. Calculate the value of the share now. (8 marks) (CLO2:PLO6:C3) (CLO2:PL06:C3) (b) Cuckoo stock currently sells for RM5 per share. The company just paid an annual dividend of RM0.50, and the growth rate is 6 percent. Calculate the dividend yield, capital gain yield and the expected rate of return on this stock. (6 marks) (CLO2:PLO6:C3) (CLO2:PLO6:C3) (c) Refer to question 5 (b), if the required rate of return on this stock were 10 percent, calculate the stock price and also the dividend yield for the stock. (3 marks) (CLO2:PL06:03) (CLO2:PLO6:03)
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