Shares in TPG Telecom Limited (TPM) were trading for $1.63 on 23 August 2023. TPM paid...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Shares in TPG Telecom Limited (TPM) were trading for $1.63 on 23 August 2023. TPM paid a total dividend of around 3.9 cents per share in the prior year. Assuming that the required return is 13.14%, what future dividend growth rate is being used to price TPM's shares? (2) If a company has a return on equity (ROE) of 25% and wants a growth rate of 10%, how much of the ROE should be retained? (1) You are evaluating the purchase of Cool Toys, Inc.'s ordinary share that just paid a dividend of $1.80. You expect the dividend to grow at a rate of 12%, indefinitely. You estimate that a required rate of return of 17.5% p.a. will be adequate compensation for this investment. Assuming that your analysis is correct, what is the most that you would be willing to pay for the ordinary share if you were to purchase it today? Shares in TPG Telecom Limited (TPM) were trading for $1.63 on 23 August 2023. TPM paid a total dividend of around 3.9 cents per share in the prior year. Assuming that the required return is 13.14%, what future dividend growth rate is being used to price TPM's shares? (2) If a company has a return on equity (ROE) of 25% and wants a growth rate of 10%, how much of the ROE should be retained? (1) You are evaluating the purchase of Cool Toys, Inc.'s ordinary share that just paid a dividend of $1.80. You expect the dividend to grow at a rate of 12%, indefinitely. You estimate that a required rate of return of 17.5% p.a. will be adequate compensation for this investment. Assuming that your analysis is correct, what is the most that you would be willing to pay for the ordinary share if you were to purchase it today?
Expert Answer:
Answer rating: 100% (QA)
1 To determine the retention ratio we can use the formula Retention Ratio 1 Growth R... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
ABC Company, a public organization, engages K. Young, CPA, to audit their financial statements. In this scenario, the intended users of the financial statements would be Select answer from the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Question: Old MathJax webview Old MathJax webview i need ans of these question but the source is alot Old MathJax webviewOld MathJax webview i need ans of these question but the source is alot these...
-
Colors and More is considering replacing the equipment it uses to produce crayons. The equipment would cost $1.37 million, have a 12-year life, and lower manufacturing costs by an estimated $304,000...
-
In 2010, President Obama said that technological progress kills jobs. Recall that labor-saving technology substitutes for existing labor inputs and reduces the marginal product of labor. Taking the...
-
Use the facts in Exercise 1-11 to prepare a July 31 balance sheet for Windsor Learning Services, similar to Exhibit 1.10. In exercise 1-11 Analysis Component: Identify how much of the assets held by...
-
Florida-Pure, K.K., the Japanese affiliate of a U.S. beverage company, mixes and bottles citrus drinks for sale in the Japanese domestic market. Florida-Pure K.K.'s Junc 30 balance sheet is: Exchange...
-
Bear Stearns & Co Answer the following 10 questions, using the financial statement data from Blockbuster Entertainment Corporation. Show your work (i.e., note what numbers you're using). On May...
-
The Northwest Corporation has outstanding 4 0,000 shares of 8 % percent, $ 66 par-value, cumulative, nonparticipating preferred stock and 100,000 authorized common shares of which 9 0,000 shares of...
-
Carie Corp. enters into an arrangement with Wilson Enterprises whereby Wilson will assume $100,000 of Caries receivables for a 6% fee. These receivables have a related allowance for uncollectible...
-
Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: Annual lease payment: $770,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1, 2023...
-
Discuss What maintenance is needed (guidelines updated, new software etc) for new or updated HIE ? Include references
-
Two identical twins hold on to a rope, one at each end, on a smooth, frictionless ice surface. They skate in a circle about the center of the rope (the center of mass of the two-body system) and...
-
AMS Fertilizers is a 11-year-old fertilizer manufacturing company in Punjab, decided to expand their business in 3 other states namely Karnataka, Tamilnadu and Assam where the product is having good...
-
Discuss the application of trigonometric functions in the study of the fundamental group of a circle, particularly in relation to covering spaces.
-
What is Strategic Alliance Development? In your opinion how does it benefit both the supplier and the buyer - give at least 2 points each on how it benefits both the supplier and the buyer.
-
On 1 July 2021, Croydon Ltd leased ten excavators for five years from Machines4U Ltd. The excavators are expected to have an economic life of 6 years, after which time they will have an expected...
-
EuroVirtuals EPS and Euro Appreciation/ Depreciation. Since its introduction in 2003, the euro has been fluctuating against major global currencies. a. What is the impact of 15% appreciation of all...
-
EuroVirtuals EPS Sensitivity to Exchange Rates (B). Assume a major weather crisis hits Switzerland, reducing its agricultural and food industries and subsequently leading to a macroeconomic...
-
EuroVirtuals Global Taxation and Effective Tax Rate. All MNEs attempt to minimize their global tax liabilities. Return to the original set of baseline assumptions and answer the following questions...
Study smarter with the SolutionInn App