1. The banking crises in 2017/18 in Ghana was partly attributed to bad corporate governance practices. Briefly discuss (5) features of good corporate governance mechanisms.

[5 marks]

2. Let's assume the required rate of return on Sky Limiteds stock is 10%. Currently, Sky Limited Company stock is trading at GHS 10 per share. Further, assume that during the next few years Sky Limited dividends will increase rapidly and then grow at a stable rate. Next year's dividend is expected to be GHS 1 per share, but dividends will increase annually by 7%, then 10%, then 12%, and then steadily increase by 5% after that.

1. What is the intrinsic value of Sky Limiteds stock?

[6 marks]

2. What can you say about the value of Sky Limiteds stock compared to its market value?

[4 marks]

3. Below is data for Morelove Company Limited for 2021.

FCF0 = $50 million

WACC = 12%

FCF is expected to grow at a constant rate of gL = 5%

Short-term investments = $70 million

Debt = $250 million

Preferred stock = $70 million

Number of shares =n = 10 million

1. What is the value of operations?

[3 marks]

3. What is the total value of company?

[2 marks]

4. Compute the intrinsic value of equity.

[3 marks]

5. Based on the value of equity determined in c, compute the intrinsic stock price per share.

[2 marks]