Question: a) Using the Dividend Discount Model (DDM), you estimate the intrinsic value of ABC Ltd is $7.80. If the constant dividend growth rate is 4%

a) Using the Dividend Discount Model (DDM), you estimate the intrinsic value of ABC Ltd is $7.80. If the constant dividend growth rate is 4% and the required rate of return is 12% per annum. Calculate the dividend per share paid by ABC Ltd today.

b) ABC Ltd just announced that it is not expected to pay any dividends for the next 3 years. Then the expected dividend per share found in part (a) will be paid to shareholders, which will continue to grow at a constant rate of 25% per annum for another 3 years. After that, the dividend will grow indefinitely at 4% per annum. If the rate of return is 11% per annum, what is the current value of a share in ABC Ltd?

c) Your friend purchased a preference share of ABC Ltd. If the discount rate is 8%, what is the current value of a preference share paying $3 dividends perpetually?

d) Explain the differences between primary market and secondary market.

e) If the constant growth rate of dividend is zero, then the intrinsic value of a share decreases over time. True or false? Explain.

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