Question: Perform a valuation exercise for Longreach Ltd which is listed on the ASX. Longreach Ltd currently pays a dividend of 25 cents per share. Longreach's

Perform a valuation exercise for Longreach Ltd which is listed on the ASX. Longreach Ltd currently pays a dividend of 25 cents per share. Longreach's estimated cost of equity capital is 9% p.a.

Required

Estimate the price per share using the zero growth model. [5 marks]
Assume a constant growth rate of 6% into perpetuity. What is the estimated price?[5 marks]

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

What are the similarities and differences between the business ventures of Wander Girls and Roxanne Quimby?

David Whitehead David Whitehead (Pty) ltd is a South African fashion retailer. It was founded by Mr David Whitehead in 1950. Its ownership has remained in the David Whitehead family ever since. The...

Power Sales (Pty) ltd Statement of Comprehensive income for the year ended 30 June 2022 Note 2022 2021 R 000 R 000 Sales 1 304 740 283 408 Cost of Sales 2 (154 747) (124 272) Gross profit 3 149 993...

Hi I have homework from Fundamentals of Business Finance. Could you please help me to complete the Excel Answer form. Including the workings how you got the numbers. Thanks TEAM LEADER NAME: TUTOR...

Hi The subject is on Fundamentals of Business Finance. The Topic is mainly on Capital Budgeting (Cashflow). Could you please help me to complete the Excel Answer form. Including the workings how you...

The presentations, of work-in-progress on the major assignments, will occur during the tutorials in Weeks 8 and 9. The presentations are worth 5% of the total assignment. The presentations will be on...

FIN201 Final Exam Sample MULTIPLE CHOICE. 1. Why will banks permit the use of an overdraft as suitable for funding the purchase of inventory that will quickly be converted into cash? A. To assist a...

Microsoft Word - ACCT2212 Group Assignment 2017.doc Analyse the financial statements for FY2008 and FY2009 using the analytical methods below and discuss any material red flags which may be revealed...

Article is in order below. Article questions are at the end (last picture). I need all of the questions at the bottom and that last picture answered. Assessing a Company's Future Financial Health...

Below, pages 1-13 is an article that needs to be read through. The very last picture is a screenshot of questions/instructions that need to be answered based off of reading the article (questions 1-4...

The International Banking Fund, the IBF, has forecasted that the global economy is likely to experience a contraction of 3% in 2020, due to the ravages of the COVID-19 pandemic on both developing and...

In deciding whether to exit or enter a market, what factors should be considered?

( a ) Use the rectangles i n each graph t o approximate the area o f the region bounded b y y = s i n ( x ) , y = 0 , x = 0 , and x = . ( R o u n d your answer t o three decimal places. ) Figure A...

Would you inform the external auditors about the fraud? Explain.

Assume you met all the requirements to blow the whistle under Dodd-Frank. Would you do so? Why or why not?

Weekly demand for DVD- Rs at a retailer is normally distributed with a mean of 1,000 boxes and a standard deviation of 150. Currently, the store places paper orders faxed to the supplier. Assume 50...

At the monthly management meeting, Leslie Smith, president of Mama Fran's Fantastic Foods, was reviewing the April budget report with some satisfaction. "Our actual results are never exactly what we...

Each of the four independent situations below describes a capital lease in which annual lease payments are payable at the beginning of each year. Determine the annual lease payments foreach:...

What analytics type will be used to address the following question, "Which assets should John Deere invest in: a new piece of manufacturing equipment or new supply chain software?"? descriptive...

Assumethat Jennifer did not wantto terminate any of her employees during periods of economic slowdown. Describe strategies Jennifer might use to deal with the labour surplus? While in college,...

Whatshould be the format and final form of the store managers job description? Based on her review of the stores, Jennifer concluded that one of the first matters she had to attend to involved...

Should Jennifer recommend an HRIS to her father? If so, what kind of system? Jennifer had been considering the benefits ofimplement-ing new technologies and systems into the organization to record...