Question
SHARE VALUATION QUESTION 8 Tobias Limited has issued an unlimited number of non-redeemable preference shares with a par value of R100 each at a 4
SHARE VALUATION
QUESTION 8
Tobias Limited has issued an unlimited number of non-redeemable preference shares
with a par value of R100 each at a 4 percent (4%) discount. The preference dividend is
15 percent (15%) per year.
Management expects that the earnings per ordinary share will show no growth over the
next two years where-after it will grow at 6 percent (6%) infinitely. The most recent
dividend per share is R2,00.
The required rate of return of Tobias Limited is 20 percent (20%).
Required:
Calculate the value of the ordinary shares and preference shares of Tobias Limited.
(Show all necessary calculations).
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