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Hi,
Could you please point me int he right direction how I might calculated the share price for 2011 in question 3 YNM co.
https://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/june2011q.pdf
But the question does not ask for the share price in 2011!
It is given to you in the first line of the question, and you are not asked to check it!
Thanks John. I was looking for it as part of an analysis I was doing for the equation. I must have overlooked it.
I am querying this answer from the 72 minutes mock exam
A company has 4m share in issue with a nominal value of $0.50 per share. A dividend of 24 cents has just been paid. Four years ago the dividend was 20.51 cents per share. The beta of shares in the company is 0.5. The risk free rate is 3% and the market premium is 8%.
What is the market capitalisation of the company?
– $16,640,000
– $66,560.000 (I think this is the answer)
-$33,280,000 (but this was given as the answer)
-$28,447,000
Could you kindly assist?
The answer of $33,280,000 is correct.
The shareholders required return is 3% + (0.5 x 8%) = 7%.
The dividend growth rate is (fourth root (24/20.51) – 1) = 4%The market value per share is (24 x (1.04) / (0.07 – 0.04) = 832c ($8.32)
There are 4 M shares in issue, so the total market capitalisation is 4M x $8.23M = $33,280,000.
@johnmoffat I did all the working you did except I divided the 4m share by .50c to get 8m and multiply by $8.32. Please let me know why the shares should not be divided by .50c. Thanks.
Did I miss something in the wording of the question above? Could someone please tell me? I don’t want to make the same mistake again
Why on earth do you want to divide 4m by 50c??
The question specifically says that there are 4m shares. It does not say that the nominal value of the shares is $4m.
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