Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

b) XYZ company shares currently stand in the market at sh 120 each. The most recent dividend paid by the company was sh10 per share.

image text in transcribed

b) XYZ company shares currently stand in the market at sh 120 each. The most recent dividend paid by the company was sh10 per share. Predicted dividends for the next 5 years are:- Year 1 2 3 4 5 Dividend per share 10.00 11.00 11.00 12.00 12.00 At the end of the year 5 the share is expected to have a market value 15% above its present value. Determine the value of c) the share to an investors whose required rate of return is 10%p.a. (6 mks) The shares of Omega Parl Company currently stands at sh,120 each. The latest dividends totaled sh2.50 per share for the full year. The company is expected to grow at the rate of 10% pa in the foreseeable future. Determine whether and investor having cost of capital of 12% p.a should buy the share. (5 mks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Bitcoin

Authors: Robert P. Murphy ,Silas Barta

1st Edition

1505819784, 978-1505819786

More Books

Students also viewed these Finance questions