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Hello sir,
Doubts in mcqs
1)Juliano co has just paid a dividend of 36 cents on earnings per share of 120 cents.On average its shareholders have a required return of 12%
How do we get 84 /120 when calculating b???from where do we get 84???
2) Twizzle cowants to acquire showboat.The MD of Twizzle believes showboats future pre tax profits will be $22m in one years time and will grow at a rate of 4%p.a.The cost of equity of listed businesses similar to showboat is estimated at 10%.Twizzle’s management expect to make cost savings of $2m once it is in charge of showboat
What is the value of showboat ???
Ans:400m
Could you please show step by step???(a) If the EPS is 120 and the dividend is 36, then the amount retained is 120 – 36 = 84.
b is the proportion of earnings retained.(b) You use the dividend valuation formula. MV = (22 + 2) / (0.10 – 0.04) = 400.
(Does not your book show the workings?)Hi..
Can some one help me on this plz.
why is the working capital calculation different while calculating NPV of a project.
this is in reference with BPP Revision kit Q43 and Q44.You must start a new thread when you are asking about something different.
I assume you are asking about the working capital recovery?
If so, the Q 43 specifically says to ignore the recovery, where as Q 44 does not!
Thankyou so much, i just realised now as i read the question again.
Apologies for that i have just started using open tuition.
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