Mcq about M.value of share — OpenTuition Forums

Rrcc00210y ago

Hi,Dear john plz do some kind for me as usually and explain this mcqs as I feel really challenging those type of mcqs This is from opentution quiz but unfortunately I don't understand the answer by reviewing it. Btc PLC is about to pay(d1) a divedend of $0.40/share.Divedend are growing at the rate of 5%/annum.share holder req rate of return is 20%/annum and corporation tax is 25% What is current M.value Thanks

John MoffatTutor10y ago#1

You simply use the dividend valuation formula on the formula sheet. Do is 40c (the dividend about to be paid); g = 0.05; Re = 0.20. The formula gives an ex div value. We need a cum div value because there is a dividend about to be paid, and so we add the amount of the current dividend. I did suggest that you watch our free lectures on this. Our lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.

Rrcc00210y ago#2

Thanks g

John MoffatTutor10y ago#3

You are welcome :-)