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You are told by your investment advisor that Laduma Co is expected to earn R5 per share next, R6 per share the following year and
You are told by your investment advisor that Laduma Co is expected to earn R5 per share next, R6 per share the following year and that thereafter earnings are expected to grow by 8 percent per year. the divided payout ratio is 60 percent and the required rate of return on Laduma shares is 15 percent. If the current share price is R40, would you expect your adviser to make a buy, hold or sell recommendation? If transaction cost are R2,50 per share would you follow his advice?
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