Question $4$

Question text

Nevers LTD has a cost of capital of $8\%$ and is considering a project with the following 'most$-$likely' cashflows.

YearPurchase costRunning costs savings

$07,000$

$12,0006,000$

$22,5007,000$

What is the sensitivity $($in percentages$)$ of the project to changes in the levels of expected purchase costs

Question $4$Select one:

$10\%$

$14\%$

$8\%$

$4\mathrm{.}8\%$

Question $5$

GG Co has a cost of equity of $25\%.$ It has $4$ million shares in issue, and has had for many years. Its dividend payments in the years $2009$ to $2013$

were as follows.

End of year Dividends

Kshs$\text{'}000$

$2009220$

$2010257$

$2011310$

$2012356$

$2013423$

Dividends are expected to continue to grow at the same average rate into the future.

According to the dividend valuation model, what should be the share price at the start of $2014?$

Question $5$Select one:

Kshs$.0\mathrm{.}96$

Kshs$\mathrm{.}1\mathrm{.}47$

Kshs$\mathrm{.}1\mathrm{.}73$

Kshs$.1\mathrm{.}10$