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PLEASE HELP ME TO ANSWER THE ABOVE QUESTIONS PLEASE. IT'S AN EMERGENCY !! QUESTION i and II please !! Q1. (a) In raising the equity
PLEASE HELP ME TO ANSWER THE ABOVE QUESTIONS PLEASE. IT'S AN EMERGENCY !! QUESTION i and II please !!
Q1. (a) In raising the equity for the company, Stardust Berhad has issued both the preference shares and ordinary shares. For its ordinary shares, the company has recently paid a dividend of RM0.70 per share. It is expected to grow at a constant rate of 4%, and has a required return of 11%. Recently, Stardust has been persuaded to buy a new company. Stardust estimates that if it acquires the company, its constant growth rate would increase to 6.5%. However, the company's risk profile will also increase, hence a required return of 12%. Should Stardust Berhad go ahead with the acquisition of the new company? (6 marks) You are contemplating to purchase shares in Stardust Berhad. However, you are indecisive whether to buy the preferences shares or the ordinary shares. What are the things that you would consider before deciding on the type of shares that you should buy? (6 marks)Step by Step Solution
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