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Hi
In part d while calculating market return using dividend growth model, the value of Po is 1. How is that 1?
In part e(i) how is the floating rate at which anchorage can borrow directly is calculated as Sfr L+0.75%per year ( 5.75%-5.0%)?First question:
The question says that the dividend yield is 3.1%. So you can use any value you want for Po – the dividend will be 3.1% x Po, and therefore you will end up with the same answer whatever figure you use for Po.
Second questions:
I have the original exam question in front of me, and there was no part (e) in the question. (BPP must have added it for some reason). Because I only have the original exam question I am not able to help you.
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