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Hi Please assist with a fully detailed answer for
Question 3 of Financial Management assignment
QUESTION...
QUESTION 3 (25) The directors of Standacone Limited have appointed you as a merger and acquisition...
QUESTION 3 (25) The directors of Standacone Limited have appointed you as a merger and acquisition specialist. They are considering the take-over of Allied Conveyors Limited and you are to advise them whether or not to proceed with the project. The following market information is supplied to you: Earnings Per Share Standacone 315 c Allied Conveyors 252 c Market price Per Share R 4.00 R 3.00 Number Of shares 3 million 1 million Additional information: • Cash payment of R5...
You have been appointed as a financial consultant cost of capital of the company, (25 Marks)...
You have been appointed as a financial consultant cost of capital of the company, (25 Marks) the directors of ABC Limited. They require you to calculate the The following information is available available on the capital structure of the company 1 500 000 Ordinary shares, with a market price and the return on the market is 15%. price of R3 per share. The beta of the company is 1.8, a risk-free rate of 1 000 000 12%, R1 Preference share...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last si...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last six years dividends have been held constant at 5p per share per annum. A dividend of 5p per share has been paid on the 30 June 2022. The market expects the annual dividends to remain at this level for the next three years (the next dividend is due in one year's time) and then to increase at...
Answer the following all part of one question 4. You are a financial manager of a...
Answer the following all part of one question 4. You are a financial manager of a firm and are asked to assess the cost of capital of your firm. You know that Your firm is going to pay dividend $1 per share in the next year. The current stock price is $10 per share Firm beta is 20% higher than market average Constant growth rate is 3% Expected market return is 12% and risk free rate is 2% There is...
QUESTION TWO It is commonly accepted that a crucial factor in the financial decisions of a...
QUESTION TWO It is commonly accepted that a crucial factor in the financial decisions of a company, including the evaluation of capital investment proposals, is the cost of capital. Required: (a) Explain in simple terms what is meant by the 'cost of equity capital for a particular company (5 marks) (b) Calculate the cost of equity capital for Genesis PLC from the data given below, using two alternative methods, i.e. (i) A dividend growth model (ii) The Capital Asset Pricing...
Mr. Jack Tan, the Chief Executive Officer of RonSIM Industries Limited, is not clear on what...
Mr. Jack Tan, the Chief Executive Officer of RonSIM Industries
Limited, is not clear on what the Company’s cost of capital is.
RonSIM Industries Limited last dividend was $0.30 cents per share
and the dividend is expected to grow at 5% per annum indefinitely.
The stock is currently trading on Singapore Exchange at $4.70 per
share.
(a) Calculate the cost of equity using the Capital Asset Pricing
Model (“CAPM”) and Dividend Growth Model (“DGM”).
(b) Calculate the weighted average cost...
Please answer the 3 empty boxes. Thank you! Also, show your work on how you got...
Please answer the 3 empty boxes. Thank you! Also, show your
work on how you got the calculations.
Quantitative Problem 11 Hubbard Industries just paid a common dividend, Do, of $1.50. It expects to grow at a constant rate of 3% per year. If investors require a 11% return on equity, what is the current price of Hubbard's common stock? Do not round Intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth...
PLEASE SHOW ALL WORK ON PAPER (So I can understand the steps) Problem 4 Assume the...
PLEASE SHOW ALL WORK ON PAPER (So I can understand the
steps)
Problem 4 Assume the following: T-Bill rate = 1%, Market Risk Premium = 9%, Tax rate = 20%, Beta = 2 Stock Price = $82/per share Current Dividend = $2.75 (growth rate = 5%) Shares outstanding 100 million. Total bonds =10.526 million bonds. Price of each bond = 950 Cost of Debt = 5.15%. (a): Find the cost of equity using CAMP and the dividend growth model. Calculate...
Hennops Ltd has made a profit after tax of R23.4 million in their current financial year,...
Hennops Ltd has made a profit after tax of R23.4 million in their current financial year, with a commensurate growth in their cash reserves of R26.1 million. They are considering a new capital project of R28 million, which the operations director has suggested be funded as follows: R14 million in cash and R14 million by way of a long-term loan with a fixed interest rate of 15% per annum. The financial director is aware that Hennops Ltd should continue paying...
QUESTION 1 The following information is related to JT Company PLC (JT) as at 31st December...
QUESTION 1 The following information is related to JT Company PLC (JT) as at 31st December 2018: Issued share capital of JT is $500 million and it comprises with 1,000,000 ordinary shares. JT is a quoted company and its current share price is $250. The dividend paid for the current year was $40 per share and growth rate of annual dividend payment is 5%. The retained earnings of JT were $100 million. JT has issued irredeemable preference shares for a...
QUESTION 3 (25) The directors of Standacone Limited have appointed you as a merger and acquisition specialist. They are considering the take-over of Allied Conveyors Limited and you are to advise them whether or not to proceed with the project. The following market information is supplied to you: Earnings Per Share Standacone 315 c Allied Conveyors 252 c Market price Per Share R 4.00 R 3.00 Number Of shares 3 million 1 million Additional information: • Cash payment of R5...
You have been appointed as a financial consultant cost of capital of the company, (25 Marks) the directors of ABC Limited. They require you to calculate the The following information is available available on the capital structure of the company 1 500 000 Ordinary shares, with a market price and the return on the market is 15%. price of R3 per share. The beta of the company is 1.8, a risk-free rate of 1 000 000 12%, R1 Preference share...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last six years dividends have been held constant at 5p per share per annum. A dividend of 5p per share has been paid on the 30 June 2022. The market expects the annual dividends to remain at this level for the next three years (the next dividend is due in one year's time) and then to increase at...
QUESTION TWO It is commonly accepted that a crucial factor in the financial decisions of a company, including the evaluation of capital investment proposals, is the cost of capital. Required: (a) Explain in simple terms what is meant by the 'cost of equity capital for a particular company (5 marks) (b) Calculate the cost of equity capital for Genesis PLC from the data given below, using two alternative methods, i.e. (i) A dividend growth model (ii) The Capital Asset Pricing...
Mr. Jack Tan, the Chief Executive Officer of RonSIM Industries
Limited, is not clear on what the Company’s cost of capital is.
RonSIM Industries Limited last dividend was $0.30 cents per share
and the dividend is expected to grow at 5% per annum indefinitely.
The stock is currently trading on Singapore Exchange at $4.70 per
share.
(a) Calculate the cost of equity using the Capital Asset Pricing
Model (“CAPM”) and Dividend Growth Model (“DGM”).
(b) Calculate the weighted average cost...
Please answer the 3 empty boxes. Thank you! Also, show your
work on how you got the calculations.
Quantitative Problem 11 Hubbard Industries just paid a common dividend, Do, of $1.50. It expects to grow at a constant rate of 3% per year. If investors require a 11% return on equity, what is the current price of Hubbard's common stock? Do not round Intermediate calculations. Round your answer to the nearest cent. per share Zero Growth Stocks: The constant growth...
PLEASE SHOW ALL WORK ON PAPER (So I can understand the
steps)
Problem 4 Assume the following: T-Bill rate = 1%, Market Risk Premium = 9%, Tax rate = 20%, Beta = 2 Stock Price = $82/per share Current Dividend = $2.75 (growth rate = 5%) Shares outstanding 100 million. Total bonds =10.526 million bonds. Price of each bond = 950 Cost of Debt = 5.15%. (a): Find the cost of equity using CAMP and the dividend growth model. Calculate...
QUESTION 1 The following information is related to JT Company PLC (JT) as at 31st December 2018: Issued share capital of JT is $500 million and it comprises with 1,000,000 ordinary shares. JT is a quoted company and its current share price is $250. The dividend paid for the current year was $40 per share and growth rate of annual dividend payment is 5%. The retained earnings of JT were $100 million. JT has issued irredeemable preference shares for a...
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