Question
Being a newly appointed analyst at Al-Ameen Fund Manager, one of your prime role is to facilitate the global head of valuations in providing detailed
Being a newly appointed analyst at Al-Ameen Fund Manager, one of your prime role is to facilitate the global head of valuations in providing detailed and timely analysis. The next meeting is being scheduled for the upcoming Saturday, and you are required to calculate the price of a few stocks and provide their valuations. The information is mentioned below:
A) The ABC cement has recently paid dividend D0 = Rs. 4, and growth is expected to remain 6% throughout. The required rate of return is 10%. Calculate stock price?
B) You have forecasted PK Pharma dividends of Rs.5, Rs. 7, and Rs. 9 over the next three years respectively. After the end of three years the anticipated selling market price of PK Pharma will be Rs. 0. What is PK Pharma stock price provided a 10% expected rate of return?
C) Merck & Co. is predicted to pay Rs. 2.50 dividend in one year. Further, the market is forecasting a growth in the companys dividend by 3% per year. Given rate of return of 8% in this category, what is stock price of Merck & Co. to be in the third year?
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