Working capaul Discount rate for huangibly mati Company its Small dock premiing thing the cicco cummings method, during the value of company A. in Calculate ibe required me of mourn for company it using the bush up approachQUESTION ONE Explain the role of the follin ing participants of your country's securities exchange: Market markers (1 mork ) Commission brokers Regmalered trader, (1 mark) Showilia Limited's share is currently trading at Sh.25 at the securities exchange. The climated cuminghated currer branding U PS) is Sh. 1.875: the dividend payout talk is 35%. and it is estimated that the price to caminus (PI I caminus of pursu talia is jour's time will be 19 Required The ciposted tale of return from the company's share in the nest ime year Turin Lined paul a dividend per share (DPS) of Shul yesterday, It is expected that that thannge, Thiing at San an sale of 10. per annum for the first 4 yours, 194 per annum for the next 10 years and and and a the priced is of 59% per immun perpetually. The investor's expected rate of return is 12ta Required: The value of Faring limited's share today (6 marks) Discuss three contrary opinion rules in relation to technical analysis. Jack Jester, an incyperienced and unqualified porum working in a financial analyst's office claims in have a superior insthod of picking undervalued slurs, ffe claims that the best way to find the value of's share is in divide cammitzi before interest, tax. depreciation und amunnation (InTIDA) by the risk-free rate of a bond and is urging sour clicin to invest in Whole Foods Lid.'s share. Jack Jester argues that Whole Foods Lid." EBITDA of Sh 1,580 million divided by the king-form government hand coupon rate of 719 gives a total value of 5h.22.5714 million With 318 million shares outstanding, the market value per share using this method is Sh.70.98. The shares of Whole Fouls Ild's merkel price per share IMPS is Sh.36.50. Required: Argue four cases against the h aned by Jack Jester (Total: 20 marks)QUESTION TWO In an industry. the longest two firms have a market share of 209% each while six other firing have a market share of 10A each Required: They live finns sunscentration ratio (I mark) The Herfindahl Hirschman Indes (Ill for the fire firms (2 marks) laterpores the soulis obtained in ta) tig alive (1 mark) Examine two limnations of using WITH on assess the competitiveness of a market CF41 Page I Out of (5) Mchained Komora, an equity analyst at Wealth Investment and Consultancy Services Limned is preparing a Ngon on his home country manufacturing firm in the beverage induary, The has fingered this information given below Ratios for Beverage Industry fades and Broad Stock market Index Year 2012 2013 2014 2015 2016 2017 Return un equity lleverage industry index ('s) 125 120 1501 21.6 21.0 Markel index 10,2 12 20. 213 Average price to earnings (1/E) calis leverage industry index 28.5 Lines Market index 10.2 14.0 19.1 Dividend pay-out ratin Beverage Industry index chal N.K 121 17.1 Market Index 30 14 Average dividend yield Beverage industry indes ("a) 01.7 D.X Market index 246 22 Required Using the shove inforussin, dorennie the phase of industry life cycle in which the beverage injury is Citing four reasons, justily your answer in thi) (is alive. (5) Caroling Anyungo, a Cenified Investment and Financial Analyst (CIFAr has been provided moverspvidoces providaided w information relating to two private companies for mulysis Company A: Working capital SK-100.010 Non-cument aucts Sir 1.600,809 Normalised comings Sib 225,000 Requirel return on working capital Required return on hun-current ants Growth rate of residual incuille
