Question 17 You must estimate the value of Kendra Enterprises’ entire share. The free cash flow (FCF) at the end of the year is expected to be R25 000 000 and it is expected to grow at a constant rate of 8,50% a year thereafter. The company’s weighted average cost of capital (WACC) is 11%. The company has a R200 000 000 of long-term debt plus preferred shares, and there are 30 000 000 shares of ordinary shares are outstanding. What is company's estimated value per share of ordinary shares? 1. R22,67 2. R24,00 3. R25,33 4. R26,67
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Question 17
You must estimate the value of Kendra Enterprises’ entire share. The
1. R22,67
2. R24,00
3. R25,33
4. R26,67
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