[mkinankhn]

Thanks

[mkinankhn]

Q1. The following information relates to ABC plc.
£m Market Values

Ordinary shares (nominal value £1) 20.0 £5.10 per share

9% Irredeemable bonds (nominal value £100) 9.5 £98.30 per bond

ABC plc has a cost of equity of 10.0% and pays profit tax at 28% per year. What is the market value weighted average cost of capital of ABC plc?

MY ANWSER IS 9.71 (IS IT CORRECT)

Q2. ABC plc’s current cum-div share price is £2.68 and the company has announced a dividend of 14p. Which of the following is nearest to the rate investors expect its dividends to grow in the future, if the current share price is thought to be a fair one and if investors require a rate of return of 15%?
MY ANSWER IS 9.0% (IS IT CORRECT)

Q3. The current ex div market price of the ordinary shares of ABC plc is £5.24 and a dividend of 42p will be paid next year. Dividend growth is expected to be 5% per year for the foreseeable future. What is the cost of equity of ABC plc?
MY ANSWER IS 13%. (iS THIS ANSWER CORRECT)

[mkinankhn]

A project has the following cash flows and a payback period of 3.5 years.

Year 0 1 2 3 4 5
Cash Flows (420) 50 100 200 800

What is the missing cash flow for year 4?

My answer is 140. is it correct.

[mkinankhn]

Could you check these answers because these practice questions that if they are correct
My answer
Q.1 10.5%
Q.2 .3.77
Q.3. 50300

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