Corporate finance

1. Suppose your friend owns 100 shares of Ali Baba's preferred stock. The fair price is RM52.00 per share and the share is paying an annual dividend of RM4.50 per share. i. Calculate the investor's required rate of return. it. If he requires a 10 percent return, should he buy or sell more of the stock at RM52.00 per share? 2. Latiff plan to purchase a stock which is expected to pay a dividend of RM1.00 per share in year 1, RM1.25 per share in year 2 and RM1.50 per share in year 3. Latiff plans to sell the stock after three years for RM15 each. If his required return is 15 percent, determine the value of the share today. 3. Kaseh Berhad has just paid a dividend of RM0.60 per share. The company's stocks are currently selling at RM12 per share. If the dividends are expected to grow at 6.5 percent constant rate and required return expected to be at 10 percent, compute the price of the stock 3 years from today. 4. CUCKOO Co. had recently paid a dividend of RM3 per share. The dividend is expected to grow at a rate of 5 percent next year, 7 percent for the following two years, and then it will grow at a normal constant rate of 8 percent for the foreseeable future. The investor's required rate of return is 10 percent. What is the fair price of the stock today