Question: COURSE ; EQUITY AND FIXED INCOME Question 1 (4 marks) 1.1KimberleyLimitedisexpectedtopayadividendof125centsoneyearfromtoday.YoubelieveitcanbesoldforR35oneyearfromtoday.Iftherequiredreturnis14%,whatisthemostyouwouldpaytodayforKimberleyLimited?(2) 1.2DurbanLimitedspreferredshareswillpayadividendof650centsoneyearfromtodayandeveryyearthereafter.Iftherequiredreturnonitspreferredsharesis7%,howmuchistheshareworth?(2) Question 2 (6 marks) Rustenburg Mining Limited just paid a dividend of 400

COURSE ; EQUITY AND FIXED INCOME

Question 1 (4 marks)

1.1KimberleyLimitedisexpectedtopayadividendof125centsoneyearfromtoday.YoubelieveitcanbesoldforR35oneyearfromtoday.Iftherequiredreturnis14%,whatisthemostyouwouldpaytodayforKimberleyLimited?(2)
1.2DurbanLimitedspreferredshareswillpayadividendof650centsoneyearfromtodayandeveryyearthereafter.Iftherequiredreturnonitspreferredsharesis7%,howmuchistheshareworth?(2)

Question 2 (6 marks)

Rustenburg Mining Limited just paid a dividend of 400 cents per share. Investors require a 12% return, and dividends are expected to grow at 3% per year, forever.

2.1 What is the value of Rustenburgs share today? (2)
2.2 What is the price of Rustenburgs share expected to be one year from today? (2)
2.3 What is the expected capital gains yield for Rustenburgs stock? (1)
2.4 What is the expected dividend yield? (1)

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