QUESTION 2 (20 MARKS) (a) Along company is expected to pay dividends of RM0.18 to its company's ordinary shareholders next year and the growth rate is fixed, that is 5 percent per year. The market price of shares is estimated to raise at RM4.25 at the end of next year. If the required rate of return is 11 percent, what is the present value of the shares. (5 marks) (b) Syntax Company sold its preference shares at the price of RM5.50 and pays dividends of RM0.25 per share. What is the expected rate of return if you purchase the shares at market price? (5 marks) (c) Awan Teras Company has just sold its ordinary shares at the price of RM2.30 per share. Last year, the company paid dividends of RM0.25. Based on the economic situation and the current development in the company, the management expects that the company will not experience growth for a long period of time. What is the expected rate of return for the shares of Awan Teras Company? (5 marks) (d) The ordinary shares for Keris Silang Company were recently sold at the price of RM3.38. The company has just paid dividends of RM0.30 per share and is expected to experience constant growth of 8.5 percent. If you purchase these shares in the market, what is the return that you would expect to receive? (5 marks) QUESTION 2 (20 MARKS) (a) Along company is expected to pay dividends of RM0.18 to its company's ordinary shareholders next year and the growth rate is fixed, that is 5 percent per year. The market price of shares is estimated to raise at RM4.25 at the end of next year. If the required rate of return is 11 percent, what is the present value of the shares. (5 marks) (b) Syntax Company sold its preference shares at the price of RM5.50 and pays dividends of RM0.25 per share. What is the expected rate of return if you purchase the shares at market price? (5 marks) (c) Awan Teras Company has just sold its ordinary shares at the price of RM2.30 per share. Last year, the company paid dividends of RM0.25. Based on the economic situation and the current development in the company, the management expects that the company will not experience growth for a long period of time. What is the expected rate of return for the shares of Awan Teras Company? (5 marks) (d) The ordinary shares for Keris Silang Company were recently sold at the price of RM3.38. The company has just paid dividends of RM0.30 per share and is expected to experience constant growth of 8.5 percent. If you purchase these shares in the market, what is the return that you would expect to receive
