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4.1 Using the dividend growth model, an analyst has estimated that her company's cost of equity capital is 18% per annum. The current ex-dividend share

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4.1 Using the dividend growth model, an analyst has estimated that her company's cost of equity capital is 18% per annum. The current ex-dividend share price is 211.7 Rand, and the current dividend is 12 cents per share. Do calculations to show what rate of dividend growth the analyst is assuming. Required: Determine the rate of dividend growth that the analyst is assuming. Use calculations to support your answer (8 marks) 4.2 Use the information provided below to calculate the market value of the Debenture: INFORMATION: R3 million 11%, debentures due in 5 years and the current yield-to-maturity is 8%. (5 marks) 4.3 Suppose shares in Ink Corporation have a beta of 0,80. The market risk premium is 8%, and the risk-free rate is 10%. Ink Corporation's last dividend was R2,00 per share, and the dividend is expected to grow at 8% indefinitely. The share currently sells for R24,00 Required: Calculate the cost of equity capital using: 4.3.1 CAPM model (4 marks) 4.3.2 Gordon Growth Model (6 marks) 4.4 Information: SABC Limited has 1 000 000 R5, 9% preference shares with a market price of R3.40 per share. Required: Calculate the cost of Preference shares for SABC limited (2 marks)

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