Question 2 a. Assume you are a financial manager, managing your client investment. Your client has...

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Question 2 a. Assume you are a financial manager, managing your client investment. Your client has three options of investment as presented below. Investment 1 YangLang Inc's common stock current dividend (Do) is RM0.40, and is expected to grow at a rate of 6% annually. Investment 2: Alamanda Inc's dividend will grow at a rate of 40% this year, 25% next year, 23% and 10% thereafter. The current dividend (Do) is RM0.80. Investment 3: Chamomile Inc's preferred stock pays a RM2.75 dividend. From the above information you are required to: i. determine the price of today's stocks for each, if the required rate of return is 15%, (8 Marks) 3 1 ii. based on your answer in part (a) recommend which stock is the best for your client to invest in. Explain your recommendation. (2 Marks b. Rose&Petal bonds, have a coupon rate of 8% and a par value of RM1000, and will mature in 20 years. If you require a return of 7%, what price would you be willing to pay for the bond? (2.5 Marks) (Total: 12.5 Marks) Question 2 a. Assume you are a financial manager, managing your client investment. Your client has three options of investment as presented below. Investment 1 YangLang Inc's common stock current dividend (Do) is RM0.40, and is expected to grow at a rate of 6% annually. Investment 2: Alamanda Inc's dividend will grow at a rate of 40% this year, 25% next year, 23% and 10% thereafter. The current dividend (Do) is RM0.80. Investment 3: Chamomile Inc's preferred stock pays a RM2.75 dividend. From the above information you are required to: i. determine the price of today's stocks for each, if the required rate of return is 15%, (8 Marks) 3 1 ii. based on your answer in part (a) recommend which stock is the best for your client to invest in. Explain your recommendation. (2 Marks b. Rose&Petal bonds, have a coupon rate of 8% and a par value of RM1000, and will mature in 20 years. If you require a return of 7%, what price would you be willing to pay for the bond? (2.5 Marks) (Total: 12.5 Marks)