Big Mart Berhad's stock dividend at the end of this year is expected to be RM 2.50

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Big Mart Berhad's stock dividend at the end of this year is expected to be RM 2.50 and it is expected to grow at 10% per year forever. The required rate of return on Big Mart Berhad's stock is 14% per year.

a) What is Big Mart Berhad's stock intrinsic value?

b) If Big Mart Berhad's current market price is equal to intrinsic value, what is next year's expected price?

c) If an investor were to buy Big Mart Berhad's stock now and sell it after receiving the RM 2 dividend a year from now, what is the expected capital gain (i.e. price appreciation) in term of percentage? Compute the dividend yield and what would be the holding period return.

Posted Date: May 18, 2024 01:12 PM

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Big Mart Berhad's stock dividend at the end of this year is expected to be RM 2.50

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