QUESTION:

PARTS:

1):In September of 2004, Microsoft, Inc. was trading at $27.29 per share. At that time, Microsoft was paying an annual dividend of $0.32 per share, which is double its 2003 dividend of $0.16 per share.If this trend is expected to continue, what is the required return on Microsoft?

2):Suppose the dividends of ABC Co. for first three years are expected to have a growthrate of 8%, 10% and 12% respectively and after which the dividend will grow at a constant rate of 4% forever. The last dividend the Co. paid was Rs.1/=.What price you will be willing to pay for the share of ABC Co. if your required rate of return is 9%?

3): Engro is selling at Rs.220 per share. The most recent annual dividend paid was Rs. 9. Using the Gordon Growth model, if the market requires a return of 13%, what is the expected dividend growth rate for Engro?