ad Mining and Manufacturers shares have a beta of 1.40. At present government bonds/treasury bills present a return of 6% and the market return is 12%. Otad's dividend was R2.20 per share last year and they expect dividends to grow at 5%. Their shares sell for R30 per share at present (par value R20) Calculate Otad's cost of equity using: 1. The Dividend Growth Model 2. The Capital Asset pricing model 3. Explain the reason/s for each method pres
ad Mining and Manufacturers shares have a beta of 1.40. At present government bonds/treasury bills present a return of 6% and the market return is 12%. Otad's dividend was R2.20 per share last year and they expect dividends to grow at 5%. Their shares sell for R30 per share at present (par value R20) Calculate Otad's cost of equity using: 1. The Dividend Growth Model 2. The Capital Asset pricing model 3. Explain the reason/s for each method pres
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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Otad Mining and Manufacturers shares have a beta of 1.40. At present government bonds/treasury bills present a return of 6% and the market return is 12%. Otad's dividend was R2.20 per share last year and they expect dividends to grow at 5%. Their shares sell for R30 per share at
Calculate Otad's
1. The Dividend Growth Model
2. The
3. Explain the reason/s for each method presenting different answers.
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