QUESTION 4

Assume that an equity investor seeking a 16 percent return on investment expects the First National Bank of Namibia (FNB) to pay its shareholders a N$4.50 dividend in 2021. Following that, the Equity Investor anticipates FNB will pay dividends of N$5.20, N$6.80, N$7.6, and N$8.7 during the next four years. The Equity Investor forecasts that FNB's share price will rise from N$18.59 to N$28.77 in one year and to N$75 in four years. a) Using the single period Dividend Discount Model estimate the value of FNB share? (3 Marks) b) Using the Multi- period Dividend Discount Model estimate the value of FNB share? (5 Marks) c) Mention and explain 4 factors affecting Market Efficiency and how these factors will behave within the 3 Degrees of Market Efficiency? (12 Marks)