a) You are currently thinking about investing in an ordinary share The share recently paid a dividend of $2.25 and the dividend is expected to grow at a constant rate of 5 per cent p.a. You normally require a return of 14 % p.a. on shares of similar risk.Calculate the value of the share using the Dividend Discount Model (DDM).

(b) Ambrose Ltd expects to pay a dividend of $5.90 per share next year. The dividend is then expected to grow by 10% per annum for years 2 and 3. After that (year 4 and beyond), the dividend is expected to grow at 3% p.a. indefinitely. Calculate the value of the share using the super-normal/multi-stage Dividend Discount Model assuming shareholders require a return of 13% p.a.

c)A preference share has a par value of $100 and pays a dividend of 5% of par each year. It currently trades at a price of $33.75 per share. Calculate the shareholders required annual rate of return (as a percentage to two decimal places)