You are one of the shareholders of Mixed Emotions (Pty) Ltd and you have received the...

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You are one of the shareholders of Mixed Emotions (Pty) Ltd and you have received the following dividends per share over the last five years: 2020 2019 2018 2017 2016 5.2. Year Mixed Emotions communicated a dividend per share of 2.98 for the 2021 year of assessment and management expects dividends to grow at a constant dividend growth rate. Required: Show all calculations and round off answers to two decimals. 5.1. Use the dividends listed in the table above together with the future value interest factor tables to calculate the average dividend growth rate for the period 2016-2020. (4) If you expect to receive a return of 14% for your investment in Mixed Emotions' shares, how much would you be prepared to pay for one share? 5.3. 5.4. Dividend per share 2.78 2.62 2.54 2.48 2.08 (4) If you expect to receive a return of 10% for your investment in Mixed Emotions' shares, how much would you be prepared to pay for one share? (4) A required rate of return on investment includes both a risk-free rate and a risk premium. Assuming that the risk-free rate for both the above required rates of return is 6%, compare your answers to (13) 5.2 and 5.3 and explain the effect of the changes in the risk premium on the share prices. You are one of the shareholders of Mixed Emotions (Pty) Ltd and you have received the following dividends per share over the last five years: 2020 2019 2018 2017 2016 5.2. Year Mixed Emotions communicated a dividend per share of 2.98 for the 2021 year of assessment and management expects dividends to grow at a constant dividend growth rate. Required: Show all calculations and round off answers to two decimals. 5.1. Use the dividends listed in the table above together with the future value interest factor tables to calculate the average dividend growth rate for the period 2016-2020. (4) If you expect to receive a return of 14% for your investment in Mixed Emotions' shares, how much would you be prepared to pay for one share? 5.3. 5.4. Dividend per share 2.78 2.62 2.54 2.48 2.08 (4) If you expect to receive a return of 10% for your investment in Mixed Emotions' shares, how much would you be prepared to pay for one share? (4) A required rate of return on investment includes both a risk-free rate and a risk premium. Assuming that the risk-free rate for both the above required rates of return is 6%, compare your answers to (13) 5.2 and 5.3 and explain the effect of the changes in the risk premium on the share prices.

Answer rating: 100% (QA)

51 To calculate the average dividend growth rate for the period 20162020 we can use the formula Dividend growth rate Dividend in current year Dividend ... View the full answer