please answer in 40 mins please

PART B (40 MARKS) QUESTION 1 (20 MARKS)

a) What is dividend? (3 marks)

b) Why does the value of a share depend on dividends? (3 marks) c) UDA Properties Berhad just paid a dividend of RM2.53 per share on its stock. The dividends are expected to grow at a constant rate of 5.4 percent per year, indefinitely. If investors require 10 percent return on this stock, i. What is the current price? (6 marks) ii. What will be the price in year three (3)? (8 marks)

QUESTION 2 (20 MARKS)

a)

YEAR CASH FLOW 0 -472,500 1 32,000 2 97,000 3 102,000 4 301,000

i. Compute Payback period of this project. (5 marks) ii. If the company pre-set limit is 4 years, should it accept? (2 marks)

Continued ...

DFN5114 FUNDAMENTAL OF FINANCE 1 9TH MARCH 2021

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b) HSR Berhad is presented with the following two projects. The required rate of return is 14.5 percent.

YEAR PROJECT M PROJECT N 0 -145,000 -350,000 1 63,000 155,000 2 81,000 175,000 3 72,000 140,000 4 58,000 105,000

i. What is the Net Present Value (NPV) for each project? (10 marks) ii. Which project/s should the company accept? (3 marks)