Current price of stock problem

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Reference no: EM13164846

QUESTION 1

a. The current price of Yusof Corporation stock is RM26.50 per share. Earnings next year should be RM2 per share and it should pay a RM1 dividend. The P/E multiple is 15 times on average. What price would you expect for Yusof Corporation’s stock in the future?

b. You are planning to purchase the stock of Tee’s Inc. and you expect it to pay a dividend of RM3 in 1 year, RM4.25 in 2 years, and RM6.00 in 3 years. You expect to sell the stock for RM100 in 3 years. If your required return for purchasing the stock is 12 percent, how much would you pay for the stock today?

c. Nico Corporation’s common stock is expected to pay a dividend of RM3.00 forever and currently sells for RM21.42. What is the required rate of return?

QUESTION 2

The Tapley Tank Company's last dividend was RM2.00. The dividend growth rate is expected to be constant at 25% for 3 years, after which dividends are expected to grow at a rate of 7% forever. Tapley's required return (rs) is 11%. What is Tapley's current stock price?

QUESTION 3

Kholdy Inc's bonds currently sell for RM1,275. They pay a RM120 annual coupon and have a 20-year maturity, but they can be called in 5 years at RM1,120. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between the bond's YTM and its YTC? 

Reference no: EM13164846

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Current price of stock problem : The current price of Yusof Corporation stock is RM26.50 per share. Earnings next year should be RM2 per share and it should pay a RM1 dividend. The P/E multiple is 15 times on average. What price would you expect for Yusof Corporation’s stock in the ..
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