X Ltd. last dividend was Do-R0.50, and the company expects to experience no growth for the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
X Ltd. last dividend was Do-R0.50, and the company expects to experience no growth for the next two years. However, X Ltd. will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate that it should sustain after that. The short-term Treasury bills are paying 5% while an average share is earning its owner 8%. Nedbank Group Ltd. is a very volatile share, responding to the economic climate with a beta of 2. The share of X Ltd. is currently trading at a price of R20. 85 REQUIRED: 1.1 What is the value of the shares of X Ltd. today? X Ltd. last dividend was Do-R0.50, and the company expects to experience no growth for the next two years. However, X Ltd. will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate that it should sustain after that. The short-term Treasury bills are paying 5% while an average share is earning its owner 8%. Nedbank Group Ltd. is a very volatile share, responding to the economic climate with a beta of 2. The share of X Ltd. is currently trading at a price of R20. 85 REQUIRED: 1.1 What is the value of the shares of X Ltd. today?
Expert Answer:
Answer rating: 100% (QA)
To determine the value of the shares of X Ltd today we can use the dividend discount model DDM to ca... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these finance questions
-
How does HCA's financial strategy affect its product-market strategy? How important is finance to HCA and in what ways? (Please no plagiarism) Hospital Corporation of America (A) In January of 1982...
-
Rio Tinto is a globally diversified industrial conglomerate, headquartered in London and has an Australian head office in Melbourne. The company's most recent dividend was $5.61, and the company...
-
Write a project management plan. we have a template and project description. we need to edit the template(table of contents) with our own ideas. CPSC 8820-01 Project Management Plan Your Unique...
-
Why will a reduction in the real interest rate increase investment spending, other things equal?
-
There are two oscillating circuits (Fig. 4.31) with capacitors of equal capacitances. How must inductances and active resistances of the coils be interrelated for the frequencies and damping of free...
-
A bank is offering to sell 6-month certificates of deposit for $9500. At the end of 6 months, the b~ will pay $10,000 to the certificate owner. Based on a 6-month interest period, compute the nominal...
-
Identify at least three grounds a party may have for objecting to interrogatories.
-
The Commonwealth of Massachusetts has passed a new law which requires all Medical Health Professionals, (hereinafter MHP) which includes but is not limited to medical doctors, psychiatrists, social...
-
The going rate on your student loan is 8% annual percentage rate (APR), why is your effective annual rate on your loan always larger than 8%? Please explain why you might prefer effective annual rate...
-
Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European juicing machines. The owner of...
-
A single taxpayer at 275% of FPL has $2,500 in APTC that needs to be paid back. How much will they actually have to pay back to the IRS in TY2023?
-
A 500-gallon water tank drains at a rate of 50 gallons per minute. The amount of water left in the tank depends on the number of minutes it has been draining. What is the range of this relation?
-
The 1 9 7 0 s allow listeners more personal chores and what they listen to at home and in their cars later people gain even more freedom when they could listen in their portable headphones when they...
-
3. An ensemble refers to a group of machine learning based classifiers that are formed to classify new data points by taking a vote of their prediction as shown in Figure 1.0. As shown in Figure 1.0,...
-
Bill can finish a report in 2 hours. Maria can finish the same report in 4 hours. How long will it take them to finish the report if they work together?
-
5. A. Please rearrange the light bulks from high temperature to low temperature. 3. B. Why is this the right order? C. If you have a green light bulk, its temperature is between which two lights?
-
A company began the year with assets of $200,000, liabilities of $40,000, and stockholders' equity of $160,000. During the year assets increased $110,000 and stockholders' equity increased $40,000....
-
Activator rod AB exerts on crank BCD a force P directed along line AB. Knowing that P must have a 100-N component perpendicular to arm BC of the crank, determine (a) The magnitude of the force P, (b)...
-
SunTrust Banks owns a large block of Coca-Cola Company (Coke) common stock that it has held for many years. SunTrust indicates in a note to its financial statements that all equity securities held by...
-
Identify the working capital accounts related to (a) Revenues recognized and deferred, (b) Cost of goods sold, (c) Employee salary and wages, and (d) Income tax expense. For each account, indicate...
-
Three years of combined data for two firms appear below (in millions). One of these firms is eBay, an online retailer with a three-year growth in sales of 337.3 percent, and the other is TJX...
-
Founded in 1998, PAETEC Communications is a broadband telecommunications firm providing local and long-distance voice, data, and Internet services to business customers in over 80 markets in the...
-
In organizations like Merck & Co., the pharmaceuticals giant, and Microsoft Corporation, the leading producer of computer software, research scientists or computer programmers often work together in...
-
In 1994, Jeffrey Bezos, a computer science and electrical engineering graduate from Princeton University, was growing weary of working for a Wall Street investment bank. His computer science...
Study smarter with the SolutionInn App