1.3 A company had net income of R12 million for the year ended 31 May 2022 and a dividend pay-out ratio of 30%. The company expects net income to grow at 10% per year for three years then at the GDP rate of 3% per year indefinitely. The required rate of return is 12% a year, debt is 30% of equity and the number of shares in issue is four million. What is the value of each share?
1.3 A company had net income of R12 million for the year ended 31 May 2022 and a dividend pay-out ratio of 30%. The company expects net income to grow at 10% per year for three years then at the GDP rate of 3% per year indefinitely. The required rate of return is 12% a year, debt is 30% of equity and the number of shares in issue is four million. What is the value of each share?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:1.3
A company had net income of R12 million for the year ended 31 May 2022
and a dividend pay-out ratio of 30%. The company expects net income to
grow at 10% per year for three years then at the GDP rate of 3% per year
indefinitely. The required rate of return is 12% a year, debt is 30% of equity
and the number of shares in issue is four million. What is the value of each
share?
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