QUESTION 2 (25 MARKS) (UNIT 3) a) Distinguish the differences between stock splits and stock dividends. (8 marks) b) Recent dividend distributed RM1. Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will increase at a rate of 5% per year indefinitely. If the required return is 20%, calculate the stock. (8 marks) BBF302/05 FINANCIAL MANAGEMENT AND ANALYSIS JULY 2020 ASSIGNMENT 2 Page 3 of 4 c) Capital Bhd. just paid a dividend of RM2.00 per share on its stock. The dividends are expected to grow at a constant 6 percent per year indefinitely. If investors require a 13 percent return on Capital stock, calculate; i) The current stock price (3 marks) ii) The stock price in 3 years (3 marks) iii) The stock price in 15 years (3 marks)