Question
Please show ways to calculate. Assume that A limited paid a dividend of29.5 cents per share just recently. The shares currently sell for $10.6. You
Please show ways to calculate.
- Assume that A limited paid a dividend of29.5 cents per share just recently. The shares currently sell for $10.6. You also estimate that the dividend will grow steadily at 2 % per year into the indefinite future. What is the cost of capital, kefor A limited? Answer as a percentage accurate to two decimal places.
2. The 90 day bank bill rate is quoted as 3.5 in the financial press. What is the correct cost of capital kbbto be used in the WACC calculation. Express as a number accurate to four places (to the nearest basis point).
3. The next dividend for ABC Limited will be $0.5 per share (D1). Investors require a 13 % return on companies such as ABC Limited. ABC's dividend increases by 3 % every year. Based on the dividend growth model what is the value of ABC Limited shares today? Price to the nearest cent
4. What is the cost of capital for bank overdraft (kbo). The overdraft rate is6.5 % pa compounded 12 times a year? Answer as a percentage to two decimal places.
5.Polycorp has a debt equity ratio of 0.36.What is the correct debt ratio D/V that should be used in the WACC formula?
WACC = ke x E/V+ kd x (1-t) x D/V
Provide an answer as a decimal accurate totwo decimal places eg 60.156% should be entered as .60
6. XYZ Corporation has just paid a dividend of56 cents per share.The current market price of the share is $15 and shareholders require a return of 9 % pa.What is the annual growth rate (g) of the dividends?
7.Calculate the cost of equity capital using CAPM if the risk-free rate of interest is 5 per cent, the return on the market portfolio is 8 per cent, the beta of the firm's assets is .8 and the and beta of equityis 1.2.
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