Questions

Value+ is currently estimating the value of its debt and equity instruments and had obtained the following information:

• Long-term government securities currently trade at a yield of 4.5%
• Cost of debt was estimated at 6.5% factoring the credit riskiness of Value+
• 60% of its profits are historically recapitalized into the business but this is expected to be at 80% beginning next year as Value+ expands into the Chinese market
• Current year profit is at Php500,000 and total shareholder's equity is at Php5,000,000 with 100,000 outstanding common shares
• Shares currently trade at Php54.00

1. What is the dividend yield of Value+?
2. What is the growth rate of Value+?
3. What is the required rate of return when the intrinsic value of the share is Php27?
4. What is the expected return of Value+?