Solve it using formulas, no tablescorrect anwer is P= £301.47An ordinary share that pays half-yearly dividends is due to make a dividend payment of £5.80per share in exactly 4 months' time. Thereafter, future dividends are assumed to increase ata compound annual effective rate of 3.5%. Determine the with-dividend price that an investorshould pay per share now in order to obtain a return of 7.5% per annum effective.You must show your full workings from the basic principles of valuing future paymentstreams.

Answered: Image /qna-images/answer/9157cb8f-6ed1-4347-858a-6c5f3bd285f7.jpg

Answered: Solve it using formulas, no tables…

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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Similar questions

As an investor with a two-year desired holding period, you have the option of buying a one-year fixed coupon bond now yielding 12% or a two-year fixed coupon bond yielding 11%. If the current forward rate of interest on future one-year bonds to be delivered one year hence were 9%, which investment would you select?
How much would you be prepared to pay for a share in 2 years’ time that pays a $1.5 dividend each year constantly ? Assume the required rate of return is expected to remain constant at 9.1% per year.
Compare alternatives A and B with the present worth method if the MARR is 14% per year. Which one would you recommend? Assume repeatability and a study period of 16 years. Capital Investment Operating Costs The PW of Alternative A is $ - 108236. (Round to the nearest dollar.) The PW of Alternative B is $ -95429. (Round to the nearest dollar.) Alternative B should be selected. A $55,000 $6,000 at end of year 1 and increasing by $600 per year thereafter $6,000 every 4 years 16 years $12,000 if just overhauled Overhaul Costs Life Salvage Value Click the icon to view the interest and annuity table for discrete compounding when the MARR is 14% per year. B $15,000 $12,000 at end of year 1 and increasing by $1,200 per year thereafter None 8 years negligible D
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The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far future year. Mimi's common stock sells for P25 per share, its last dividend was P2.50, Mimi should pay P2.50 flotation cost. What is the expected return on retained earnings for Mimi Company? a. 15.00 percent b.16.11 percent c.15.5 percent d.16.67 percent
te.3
(b) Gagah Berhad's share is expected to pay a year-end dividend of RM2 per share. The dividend is expected to grow at a constant rate of 5% and the share has a required rate of return of 9%. What is the expected price of the share five years from now? (c) Calculate the price-to-book value when the market price per share is RM8.80 and the book value per share is RM5.50.
A share is expected to pay an annual dividend of $2.53 next year, and this dividend is then expected to grow at a constant rate of 3.8% p.a. in perpetuity. If the required rate of return is 10.6% p.a., what is the value of the share?
Baghiben
Year 2 Year 1 Preference share, par value P50, 10%. Ordinary share, par value P20. Share premium - ordinary share.. Retained earnings... P100,000 400,000 P100,000 400,000 100,000 100,000 140,000 120,000 Net income 60,000 10,000 80,000 Dividends on preference share Dividends on ordinary share Market price per share, Dec 31. 10,000 50,000 40,000 28.00 21.00 Instruction: Determine the following A. Price-earnings ratio B. Dividend yield ratio C. Payout ratio D. Return of Equity E. Book value per share
The share of XYZ company is expected to distribute 3.5$ dividend a year from now, 3.5$ dividend 2 years from now and 5$ dividend 3 years from now. It is also expected that the share price will be equal to 70$ at the year 3. If the required rate of return on this share is 12%, what is the price right now? Select one: a.59.30 b.67.12 C.58.90 O d.61.10
Suppose you bought XYZ stock 1 year ago for $6.54 per share and sell it at $2.79. You also pay a commission of $0.35 per share on your sale. What is the total return on your investment? The total return is %?

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