Question 5 (a) Travel Limited is expected to pay dividend of $30 per share at the end of the year. The dividend is expected to grow at a constant rate of 3% a year. The required rate of return on Travel Limited's share is 8% a year. Required: (i) What is Travel Limited's share current value? (2 marks) (ii) What is Travel Limited's share expected price three years from now? (2 marks) (b) TAKA Limited issued perpetual preferred stock with 7% annual dividend. The stock price is HK$110 and its par value is $100. Required: (i) What is the current yield of TAKA's preferred stock? (2 marks) (ii) Suppose the market interest rate rises and TAKA's preferred stock's price drops to HK$80. What is the yield of TAKA's preferred stock then? (2 marks) (c) The sales revenue of Great Strategy Limited for 2019 is $100 million. The CEO told the sales director in December of 2019 that the board had set a target of $300 million in sales revenue for 2022 and expected that there should be stable annual growth of sales over the co years period. Required: What should be the annual growth rate of sales revenue for Great Strategy Limited? (4 marks) (d) Travel Limited provided a loan $1,000,000 to its subsidiary TAKA Limited for 5 years which is interest bearing. The annual interest rate is 11% (compound interest method), the interest and the principal will be repaid on the due date. How much should be repaid by TAKA Limited on the due date? (4 marks) (e) What is the present value of a five-year annuity of $200 per year that makes its first payment one year from today if the discount rate is 6%? (4 marks) - End of Assignment