introduction to finance

Assume now Nurdini has decided to hold the Penta Berhad's share for a period of four years. This makes the valuation of the share a little more complicated as Nurdini would need to estimate dividend streams for the for the 4-year holding period. The easiest method is to assume a constant dividend payout ratio and a constant growth of earnings into the future. The expected future dividend payments at the end of each year are: Year 1 2 3 4 Dividend per share (RM) 1.22 1.28 1.34 1.41 Assume that Nurdini had estimated the future sale price of the share by projecting dividend growth rates 4 years from now as RM30 at the estimated at the end of Year 4. Furthermore, a firm is trying to estimate its required rate of return, and it has the following information. The firm has a beta of 0.80, the expected market return is 10 percent and the risk-free rate is 7 percent. a) Compute the value of Penta Berhad's share by using multiple year holding period method. (11 MARKS)