Berhad just paid dividend of RM 4 on its stock. Below are the expected growth of...

 

Transcribed Image Text:

Berhad just paid dividend of RM 4 on its stock. Below are the expected growth of dividend per share from year 1 to year 4. At year 5, dividend is expected to grow 5% per year, indefinitely. The beta of the company is 1.5. Market risk premium is 10% and risk free rate is 4 %. Calculate the current fair value of PA Berhad stock. If the market price of the share is RM30, should you buy the stock? Year 1 2 3 4 Growth of dividend per share 10% 0% 12% -4% Berhad just paid dividend of RM 4 on its stock. Below are the expected growth of dividend per share from year 1 to year 4. At year 5, dividend is expected to grow 5% per year, indefinitely. The beta of the company is 1.5. Market risk premium is 10% and risk free rate is 4 %. Calculate the current fair value of PA Berhad stock. If the market price of the share is RM30, should you buy the stock? Year 1 2 3 4 Growth of dividend per share 10% 0% 12% -4%

Answer rating: 100% (QA)

To calculate the current fair value of PA Berhad stock using the dividend discount model DDM we need ... View the full answer