What is the value of the shares after a year

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Reference no: EM132770966

Questions -

Q1. Joseph Ricalde plans to invest and buy shares from Eunice Abad Company, a public listed company. Based on publicly available information, Joseph was able to compile the following dividends of Eunice Abad Company for the past eight (8) years.

Year Dividend per Share

2020 P2.80

2019 2.58

2018 2.40

2017 2.24

2016 2.10

2015 2.00

2014 1.85

2013 1.68

Based on the above information, Joseph believes that the historical annual growth rate of dividends is a good indicator of the future constant growth rate of dividends. Moreover, Joseph requires a 12% return on all his investments. What is the current market price of the share?

Q2. Joshua Company is contemplating whether to buy the shares of Elijah Company. Elijah recently paid dividends of P4 per share. With careful study of the business, Joshua came up with an estimate that the dividends may grow at a 3% annual rate for the next five (5) years. At the end of the fifth year, Joshua expected that the market will only lead to a constant 2% dividend growth rate. Joshua requires a 10% return in all its investments. What is the value per share of Elijah Company?

Q3. Ryza Tatlonghari wants to buy 5,000 preference shares, P150 par value from Mawon Lim. According to her sources, the preference shares come with a constant dividend of P42 per share. Ryza intends to hold the preference shares long-term and has no plans on selling them soon. Moreover, she requires a 12% return on all his investments. What is the value of each preference share?

Q4. Rachelle Ching is an investment analyst. She was asked by Macrille Samson, an investor, to assess the viability of an investment in Consti Corp. Macrille expects to hold the investment for five (5) years and sell it at the end of the holding period.

Rachelle forecasted that Consti Corp. will pay the following dividends:

Year Dividend per Share

5 P3.60

4 3.48

3 3.22

2 2.98

1 2.50

Rachelle expects that at the end of the third year, the selling price of the company's stock will be P125 per share. She also estimated that the cost of capital is 5%. The current stock price is P150 per share. What is the value of the shares?

Q5. Anna Company wants to buy shares of Sana Company which are currently selling at P30 per share on the Philippine Stock Exchange (PSE). Research shows that dividends are stable at P6 per year and it is expected to be resold at P20 per share after a year. Anna expects an 8% return on her investment and plans to hold the shares for a year. What is the value of the shares after a year?

Reference no: EM132770966

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