DEVCON INDUSTRIES LIMITED
Income Statement
For the year ending Dec. 31, 2018 and 2019
					2018		2019
					$000's		$000's
Sales					900000		1125000
Cost of Goods Sold					300000		306600
Gross Profit					600000		818400
Selling and Administrative Expenses					150000		156000
Depreciation Expense					54000		57000
Advertising Expenses					18000		21000
Earning Before Interest and Taxes					378000		584400
Interest Expense					3000		3000
Taxable Income					375000		581400
Taxation (35%)					131250		203490
Net Income					243750		377910
Dividends (40%)					97500		151164
Addition to Retained Earnings					146250		226746
Additional Information
Share Price					21		27.3
Ordinary Shares Outstanding					120000000		144000000

DEVCON INDUSTRIES LIMITED
Statement of Financial Position
As at Dec. 31, 2018 and 2019
ASSETS			2018	2018	LIABILITIES & EQUITY			2018
Current Assets			$000's	$000's	Current Liabilities			$000's
Inventories			264000	276000	Accounts Payables			138000
Accounts Receivables			294000	330000	Notes Payables			150900
Cash and Equivalents			210900	270000				288900
			768900	876000	Non-current Liabilities			120000
					Total Liabilities			408900
Net Fixed Assets			630600	690000	Equity
					Common Stock			264000
					Retained Earnings			726600
					Total Equity			990600

Q3.

(b) DEVCON Industries is also considering a Class B issue of its common stock on the market via an Initial Public Offering (IPO) in late 2021. The company is expected to pay the following dividends over the next 4 years: $2.00, $3.00, $3.50 and $4.50. Thereafter, the company is expected to increase dividends by an annual rate of 6%.

Required: Assuming investors would require a return of 12% on this riskier type of investment, how much would an investor pay for this share today