A business starts this year with P1,000,000 assets with no debt. The expected ROE equals 10%. Suppose the firm decides to have a payout of 40% for this year. How much is the expected total dividends for next year?

2. CAD Holdings is experiencing rapid growth. Earnings and dividends are expected to grow at a rate of 14% for the next 2 years, at 11% the following year, and at a constant rate of 6% on year 4 and thereafter. Its last dividend was P1.25 and required rate of return is 12%. What is the estimated value of CAD share?  

3. What is the cost of equity of a fairly valued P100 par value preferred stock that pays 7.5% annual dividend? The stock's book value per share and market price is P98.30 and P95.15, respectively.

4. ACD Co. paid P1.25 dividend per share which is expected to grow at a rate of 5.6%. If the current market value and book value per share are P62.10 and P59.00, respectively. What is the required rate of return?

Answer rating: 100% (QA)

1 To calculate the expected total dividends for next year we need to determine the equity of the business after the payout and then calculate the divi... View the full answer