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QUESTION 4 (15 Marks) [CLO 4] Explain i n your own words, the differences between direct placement, public offering and rights offering of securities? (3
QUESTION 4 (15 Marks) [CLO 4]
- Explain in your own words, the differences between direct placement, public offering and rights offering of securities? (3 Marks)
- General Cereals common stock dividends have been growing at an annual rate of 7% per year over the past 10 years. Current dividends are $1.70 per share. The investor requires a 12% rate of return.
- What is the current value of a share? (3 marks)
- Cascade Mining Company expects its earnings and dividends to increase by 7% per year over the next 6 years and then to remain relatively constant thereafter. The firm currently (that is, as of year 0) pays a dividend of $5 per share.
Determine the value of a share of Cascade stock to an investor with a 12% required rate of return.(9 Marks)
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