Question 1:

Compaq Computer has the following info:

The kg = 12% g=8% and D1= RM3.38. Compute the intrinsic value of Compaq if the dividend is expected to grow at constant rate.

Question 2

The Digis annual dividend was RM2.20 per share and the firms required rate of return is 15%. Find the intrinsic value of the companys share if dividends are expected to grow at 7 percent annually for 3 years followed by 4 percent constant annual growth rate from year 4 to infinity.

Question 3:

The Rapid Growth Company is expected to pay a dividend of $1.00 at the end of this year. Thereafter, the dividends are expected to grow at the rate of 25% per year for 2 years, and then drop to 18% for 1 year, before settling at the industry average growth rate of 10% infinitely. If you require a return of 16% to invest in a stock of this risk level, how much would you be justified in paying for this stock?

Question 4

The Regtech Sdn Bhd has released the following financial data about the company:

Earning available for common shareholder	RM1,000,000
Number of shares of common stock outstanding	400,000
Earning per share (EPS)	RM2.50
Market Price (MP)	RM50.00
Price to Earning ratio (P/E)	20.00

The firm is planning to use RM800,000 of its earnings for stock repurchase. If the company pays RM52.00 per share for repurchase, calculate the new EPS?

Question 5

Assume the following information

Earnings after taxes	$ 800,000
Number of common shares outstanding	400,000
Earnings per share	$2
Current market price per share	$31

The firm is planning to use RM600,000 of its earnings for stock repurchase. If the company pays RM34.00 per share for repurchase, calculate the new EPS?