Estimate the total rate of return, Financial Management

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Question:

Explain:

(a) the advantages and disadvantages, to a company, of debt finance over equity finance;

(b) the reasons why a company may choose to issue preference shares rather than ordinary shares or debt;

(c) four factors that will be taken into account by a bank when deciding whether or not to lend money to a client.

(d) X ltd share price was 180 cts on January 2008 and 200 cts on 31 December 2008.During the year dividends of 15cts have been paid.

Required:

Estimate the total rate of return enjoyed by the shareholder during 2008.


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