Assets

Cash 150

Account receivable 180

inventory 610

property 1280

total 2220

Liabilities:

Account payable 130

bank loan (interest only) 250

mortgage loan 510

corporate bonds 340

total 1230

Shareholder's equity

Ordinary shares 450

Preference shares 250

Retained earnings 290

total 990

Total L+E 2220

Tax rate = 30%

The ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.9. They are expected to pay a dividend of $0.05 next year. The dividend is expected to grow at a rate of 7% p.a. for the following 4 years, and after that it will grow at a constant rate of 3% p.a. in perpetuity.

Cost of ordinary shares=?

Dividend 1 year from now?

Dividend 2/3/4/5/6 years from now?

Price of ordinary shares=?

total market value of ordinary shares=? weight of value of ordinary shares=?

risk free rate = 1.740%

premium risk = 8.7%