Question
Aluworks pays a constant dividend of 145cedis per share. The shareholders of Aluworks require a rate of return of 10%. a) You are required to
Aluworks pays a constant dividend of 145cedis per share. The shareholders of Aluworks require a rate of return of 10%. a) You are required to compute the price you will be prepared to pay if you were offered a share in Aluworks. b) If you require a return which is 6.5% higher than that required by Aluworks shareholders, how much will you be prepared to pay for a share? c) If your required return is 0.75% lower than that required by the shareholders, how much would you be prepared to pay for a share in Aluworks? d) Explain the relationship between the required return and share price from your answers to the questions above
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