a)According to the company's ACT 2019, Act 992 of Ghana, it is mandatory for every registered company to organise an annual general meeting (AGM). The AGM shall be held not earlier than twenty one days after the annual reports which comprises the Financial statement, reports of the directors and auditors on the financial statements have been dispatched to shareholders and debenture holders of the company.

However, in recent times a number of investigations have been conducted by the department of Accounting and finance at Ghana Technology university college into the usemade by shareholders of the annual reports of companies in which they have invested . Several of these research shows that the annual report is regarded as an important source of information for making decisions on equity investment.

Other types of study indicate that the market price of the shares in companies does not react to in the short term to the publication of the company's annual report

Requires;

How would you reconcile these findings with each other , and with the efficient market hypotheses.

b).Delta limited is considering the possibility of floating off one of its subsidiaries , Big ice limited in the Ghana stock exchange..

The profits of the subsidiary are GHS3.2 millionper annum and these are expected to increase at 5% per annum . The book value of the net assets is GHS15 million and the market value is GHS20 million . The proposed annual dividend is GHS0.20 for each of the 10 million shares of GHS0. 50 pesewas . The company has a beta of 1.2 . The risk free rate of interest is 8% and the price-earning ratio on the market portfolio is 8. The market rate of return is 15%.

Required :

i). Estimate the share value of Delta limited using the following methods of share valuation

1) Earning basis

2).Dividend growth valuation

3) Capital asset pricing method

ii).Discuss the objectives ,strengths and weaknessesof each method used in(a) above.

c)One of the most commonly accepted objective of a firm is to maximize the value of the firm and the wealth of its shareholders and the major financial decisions that could have an impact on the wealth of shareholders is dividend payout decisions. The issue of dividend policy is therefore a very important one in the current business environment. Dividend policy is the regulations and guidelines that a company uses to decide dividend payment to its shareholders. Dividend policy decisions of company are the primary element of corporate policies which have been an issue of interest in the corporate world over the past decade.

You have just been appointed as the Finance Director of a large manufacturing company which is listed at the Ghana stock exchange. Your immediate task is to develop a dividend policy for the company

Required;

As the new finance director of the company writea memorandum to the Managing director of the company discussing the factors you will take into consideration in establishing a dividend policy for the company.

Answer rating: 100% (QA)

ANSWER a Reconciling the findings with each other and with the Efficient Market Hypothesis EMH The findings that the annual report is regarded as an important source of information for making equity i... View the full answer