Question 2 Super Growth Co. is growing rapidly. You are employed as a financial analyst of the company. You have devised the details of the company current and future dividend value as well as the growth rate as summarized in Table 2 Table 2 Dividend Gowate Prudente thereafter growth falling of per Dividend just paid One day, the CEO of the company comes to your office and asks you the following questions: - What determine the stock price? Is it dividend? What else should we consider? I notice that there are some companies like Tencent, that pays very small amount of dividend per share to shareholders could have very good rise in their stock prices. Does it mean that the dividend growth model is not useful in stock valuation? "Besides, our company has become a listed firm in Hong Kong for three years. Should the company still concem its current stock price? Why?", said the CEO Required: a. Based on the information of Table 2, what is the current share price according to dividend growth model? Show your workings. (13 marks) b. Regarding the questions of the CEO, explain your points to CEO (limit your answer to 450 words). Question 2 Super Growth Co. is growing rapidly. You are employed as a financial analyst of the company. You have devised the details of the company current and future dividend value as well as the growth rate as summarized in Table 2 Table 2 Dividend Gowate Prudente thereafter growth falling of per Dividend just paid One day, the CEO of the company comes to your office and asks you the following questions: - What determine the stock price? Is it dividend? What else should we consider? I notice that there are some companies like Tencent, that pays very small amount of dividend per share to shareholders could have very good rise in their stock prices. Does it mean that the dividend growth model is not useful in stock valuation? "Besides, our company has become a listed firm in Hong Kong for three years. Should the company still concem its current stock price? Why?", said the CEO Required: a. Based on the information of Table 2, what is the current share price according to dividend growth model? Show your workings. (13 marks) b. Regarding the questions of the CEO, explain your points to CEO (limit your answer to 450 words). Question 2 Super Growth Co. is growing rapidly. You are employed as a financial analyst of the company. You have devised the details of the company current and future dividend value as well as the growth rate as summarized in Table 2 Table 2 Dividend Gowate Prudente thereafter growth falling of per Dividend just paid One day, the CEO of the company comes to your office and asks you the following questions: - What determine the stock price? Is it dividend? What else should we consider? I notice that there are some companies like Tencent, that pays very small amount of dividend per share to shareholders could have very good rise in their stock prices. Does it mean that the dividend growth model is not useful in stock valuation? "Besides, our company has become a listed firm in Hong Kong for three years. Should the company still concem its current stock price? Why?", said the CEO Required: a. Based on the information of Table 2, what is the current share price according to dividend growth model? Show your workings. (13 marks) b. Regarding the questions of the CEO, explain your points to CEO (limit your answer to 450 words). Question 2 Super Growth Co. is growing rapidly. You are employed as a financial analyst of the company. You have devised the details of the company current and future dividend value as well as the growth rate as summarized in Table 2 Table 2 Dividend Gowate Prudente thereafter growth falling of per Dividend just paid One day, the CEO of the company comes to your office and asks you the following questions: - What determine the stock price? Is it dividend? What else should we consider? I notice that there are some companies like Tencent, that pays very small amount of dividend per share to shareholders could have very good rise in their stock prices. Does it mean that the dividend growth model is not useful in stock valuation? "Besides, our company has become a listed firm in Hong Kong for three years. Should the company still concem its current stock price? Why?", said the CEO Required: a. Based on the information of Table 2, what is the current share price according to dividend growth model? Show your workings. (13 marks) b. Regarding the questions of the CEO, explain your points to CEO (limit your answer to 450 words)
