QUESTION 3: MCQ (20 marks) 1) Van Rooyen Ltd has a return on equity of 20% and a profit margin of 12%. You expect a dividend of R2.25 to be paid next year. Your estimate of future dividend growth is 8%. Your required rate of return for this share is 15%. The best estimate of the current value of a Happy Times share, using the dividend growth model and the available information, is: a) R34.71 b) R18.75 c) R56.25 d) R32.14 e) None of the above (3) 2) Van Zyl Unlimited reflects the following dividend history: Year Dividend per share (cents) 20x5 20x4 20x3 140 120 130 20x2 20x1 118 110 20x0 100 The compound average growth rate in dividends inherent in the above dividend history is (to two decimal places): a) 6.96% b) 6.67% c) 5.77% d) 6.21% e) 8.00% (3) 3) Van der Westhuizen Ltd has annual sales of R160m and a gross profit margin of 25%. Inventory on hand in its latest balance sheet was R30m. Days sales in inventory and inventory turnover were: a) 91.25 days; 4 times b) 273.75 days; 1.33 times c) 63.875 days; 5.71 times d) 68.44 days; 4 times e) None of the above (4) 7 0 4) A client of yours plans to retire in 10 years time. She estimates that in order to have a certain pension at the end of each month for 20 years after retirement, she will need to have an investment of R3.0 million on the day she retires. If she expects to earn a rate of return of 10% per annum (nominal) on her pension investment, what is the amount that she expects to draw each month for the 20 years during her retirement? a) R26 327 b) R25 717 c) R26 952 d) R28 951 e) None of the above (4) 5) Vermaak Ltd quotes you a deposit rate of 9.0% per annum, interest compounded quarterly. The effective annual rate is: a) 9.18% b) 9.31% c) 9.84% d) 9.75% e) None of the above (3) 6) You are presented with a proposal to invest an amount of R300 000 with a promised effective rate of return of 12% per annum. You expect to receive a payment at the end of the investment period amounting to R742 789. The period of the investment is: a) 9 years b) 8 years c) 11 years 12 years e) 7 years (3) 8 lo Share ols Favorite Delete Edit More