Question: 6-Calculate the required return and the present value for both shares would you place on each share Furthermore assume that Alpha Ltd's dividend has grown

6-Calculate the required return and the present value for both shares would you place on each share Furthermore assume that Alpha Ltd's dividend has grown from $0.50 to $0.55 in the last 5-years and Beta Ltd's dividend has increased from $1.10 to $1.24 over the last 5-years. The last observed 10-year government bond yield was 2%. Justify the market risk premium you have used to calculate the required rate of return (Hint: you should be able to go online and search for the market risk premium in Australia). What concerns does the research raise in regards to dividend valuation models?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

You are provided several sets of stock market for the team to use in the presentation (Exhibit 1). The first set is 61 observations of historical monthly share prices for three different stocks and...

Calculate the required return and the present value for both shares would you place on each share Furthermore, assume that Sharp Ltd's dividend has grown from $0.50 to $0.58 in the last 5-years and...

Determine the expected return and standard deviation of a two-asset portfolios comprised of Sharp Ltd and Blunt Ltd; Assume equal weightings of each share within the portfolio. Interpret your results...

Calculate the required return and the present value for both shares would you place on each share. Furthermore, assume that Sharp Ltds dividend has grown from$0.50 to $0.58 in the last 5 years and...

Month Market Index (points) Hydro Ltd ($) Luna Ltd ($) 1 5745 21.00 0.56 2 5976 23.55 0.66 3 6057 21.99 0.71 4 6167 23.70 0.90 5 6147 23.90 0.90 6 6117 24.65 0.95 7 5869 24.06 0.93 8 6072 26.82 1.00...

Using the information given in Exhibit 1, calculate the historical returns for each company and the market index. With the use of the excel functions calculate the average monthly return and standard...

Exhibit 1 is the excel spreadsheet linked belowUsing the information given in Exhibit 1, calculate the historical returns for each company and the share market index. With the use of the excel...

How much rest mass is consumed in the core of a nuclear-fueled electric generating plant in producing (a) One joule of thermal energy? (b) Enough energy to keep a 100-W light bulb burning for 10...

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period? A. 0.20. B. 5.00 C. 20.0 D. 73.0 E. 3.0

c . What would be the Free Cash Flow for 2 0 2 2 ? NOTE: Provide your answers in dollars. E . G . for 1 0 0 M you must enter 1 0 0 0 0 0 0 0 0 . 0 0 0 0 , for 2 0 M you must enter 2 0 0 0 0 0 0 0 . 0...

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...