Sunshine Icon Berhad currently pays no dividend and reinvests all of its earnings into rapid growth. However, ABC is expected to begin paying dividends in 3 years. The first dividend will be RM 3.00; and will grow at 5% per year; the required rate of return throughout the period is 11%.

i. Deduce the current market price per share.

ii.  List THREE (3) key features of common stock.

iii. State and briefly explain TWO (2) main differences between common stock and preferred stock.

Answer rating: 100% (QA)

i To calculate the current market price per share we can use the dividend discount model DDM formula The DDM calculates the present value of all expec... View the full answer