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Consider the following TWO (2) stocks. Which stock is the most valuable stock: Rich Venture Bhd. or Better Return Bhd and why? a. Rich Venture

Consider the following TWO (2) stocks. Which stock is the most valuable stock: Rich Venture Bhd. or Better Return Bhd and why? a. Rich Venture Bhd. is preparing to pay its first dividends. It is going to pay RM1.00, RM2.50, and RM5.00 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be RM1.25 per share indefinitely. Appraise the stock worth per share if you demand a 7% rate of return. [5 marks] b. The common stock of Better Return Bhd. is expected to pay RM1.80 per share next month when the annual dividend is distributed. Better Return Bhd. has established a pattern of increasing its dividends by 4% annually and expects to continue doing so. Appraise the stock worth per share. [5 marks] *required rate of return for Better Return Bhd common stock i.e. is 11.0%

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