Hitech Ltd plans to raise $5 million for a business expansion. The company plans to sell...

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Hitech Ltd plans to raise $5 million for a business expansion. The company plans to sell shares that will pay a dividend of $3 in one year. The dividend will then grow at an annual rate of 20% for 2 years, 10% for one year and 3% for the foreseeable future. The rate of return is 13% p.a. Assume there is no cost to issue the shares, how many shares should the company sell to get enough money? Required 1. Draw a timeline showing the first 5 dividends. 2. Calculate the share price. 3. Calculate the number of shares required. Hitech Ltd plans to raise $5 million for a business expansion. The company plans to sell shares that will pay a dividend of $3 in one year. The dividend will then grow at an annual rate of 20% for 2 years, 10% for one year and 3% for the foreseeable future. The rate of return is 13% p.a. Assume there is no cost to issue the shares, how many shares should the company sell to get enough money? Required 1. Draw a timeline showing the first 5 dividends. 2. Calculate the share price. 3. Calculate the number of shares required.

Answer rating: 100% (QA)

To answer the questions we need to calculate the present value of the future dividends and then divi... View the full answer