Determine the value of one ordinary share of Carter & Briggs using: Discounted free cash flows method. To assist you with the task, the following information is provided: During Year 0, dividends proposed and paid were £120m Number of ordinary shares remains stable = 500m Dividends annual growth rate to perpetuity = 4% Carter & Briggs’s WACC is 10%, while its cost of ordinary share capital is 12% Sales revenue for Year 0 = £1,200m Carter & Briggs will experience abnormal growth of sales revenue for the next five years = 16% p.a., which is followed by stable perpetual growth at 12% p.a. Operating profit margin will remain constant at 18% of sales revenue Corporation tax is stable = 30% Annual additional working capital investment over the next six years will be 7% of annual sales growth Annual additional non-current asset investment over the next six years will be 10% of annual sales growth Long-term debt is currently = £843m Sustainable growth rate from Year 6 is 2%

Determine the value of one ordinary share of Carter & Briggs using: Dividend valuation method.  To assist you with the task, the following information is provided: During Year 0, dividends proposed and paid were £120m Number of ordinary shares remains stable = 500m Dividends annual growth rate to perpetuity = 4% Carter & Briggs’s WACC is 10%, while its cost of ordinary share capital is 12% Sales revenue for Year 0 = £1,200m Carter & Briggs will experience abnormal growth of sales revenue for the next five years = 16% p.a., which is followed by stable perpetual growth at 12% p.a. Operating profit margin will remain constant at 18% of sales revenue Corporation tax is stable = 30% Annual additional working capital investment over the next six years will be 7% of annual sales growth Annual additional non-current asset investment over the next six years will be 10% of annual sales growth Long-term debt is currently = £843m Sustainable growth rate from Year 6 is 2%

PLEASE START FROM SECTION B Use the following information about SV Inc. to calculate the company’s Cost of Capital. The stock of SV Inc. sells for $50, and last year’s dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. SVs’ preferred stock pays a dividend of $3.30 per share, and new preferred could be sold at a price to net the company $30 per share. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. The firm can issue additional long-term debt at an interest rate (or a before-tax cost) of 10%, and its marginal tax rate is 35%. The market risk premium is 6%, the risk-free rate is 6.5%, and Supreme Ventures’ beta is 0.83. In its cost-of-capital calculations, SV Inc. uses a target capital structure with 45% debt, 5% preferred stock, and 50% common equity.   REQUIRED: Section A  Calculate the cost of each capital component: the after-tax cost of debt  the cost of preferred stock (including flotation costs)…

8.An investor purchased 100 shares of common stock at GH¢20 per share one year ago. The company declared and paid a dividend of GH¢2 per share during the year. The investor sold the stock for GH¢21 per share after the one-year holding period. a.Calculate the HPR for this investment Partition the HPR into dividend return and capital appreciation return .