Exam papers, notes, holiday assignments and topical questions – all aligned to the Kenyan curriculum.
The dividend per share of Mavazi Limited as at 31 December 2000 was Sh.2.50.The company's financial analyst has predicted that dividends would grow at20% for five years after which growth would fall to a constant rate of 7%. Theanalyst has also projected a required rate of return of 10% for the equity market.Mavazi's shares have a similar risk to the typical equity market.Required:The intrinsic value of shares of Mavazi Ltd. As at 31 December 2000.
Answer Attachments
Next: Briefly discuss the disadvantages of the constant growth dividend model as a valuation model.
Previous: The management of Furaha Packers Ltd. is planning to carry out two activities at the same time to: (i) determine the best credit policy for its customers (ii)...
View more CPA Financial Management Questions and Answers | Return to Questions Index
Briefly discuss the disadvantages of the constant growth dividend model as a valuation model.
Date posted: February 8, 2019 . Answers (1)
Highlight the various measures that would minimize agency problems between theowners and the management.
Define agency relationship from the context of a public limited company and brieflyexplain how this arises.
Mumias Milling Company purchased a grinder 3 years ago at a cost of Sh.3.5 million.The grinder had a life of 8 years at the time of purchase. It is being depreciated at 15%per year on a declining balance. The company is considering replacing it with a newgrinder costing Sh.7 million with an expected useful life of 5 years.Due to increased efficiency, the profit before depreciation is expected to increase bySh.400,000 a year. The old and new grinders will now be depreciated at 25% per year ona declining balance for tax purposes.The salvage value of the new grinder is estimated at Sh.210,000. The market value of theold grinder, today, is Sh.4 million. It is estimated to have a zero salvage value after 5years.The company's tax is 30% and the after tax cost of capital is 12%.RequiredShould the new grinder be bought? Explain.
Describe in brief the greatest difficulties faced in capital budgeting in the real world.
i) What is a stock exchange index? (ii) Outline four drawbacks of the Nairobi Stock Exchange index
You are given the following price quotations on a Treasury Bond for the close oftrading on May 31 and June 30, 2000. As on June 30 this Treasury Bond has a 90-dayremaining life.(i) On May 31, the Treasury Bond had a 120-day remaining life. On that day whatpercentage of par value would you pay to purchase the Treasury Bond?(ii) Assume you purchased the Treasury Bond on May 31 and later sold it on June30. What rate of return did you earn during this one-month period
Date posted: February 7, 2019 . Answers (1)
Explain how the Capital Authority can ensure:(i) faster growth and development of the Nairobi Stock Exchange or StockExchange in your country. (ii) development of other stock exchanges in Kenya or in your country.
What economic advantages are created by the existence of:(i) Primary markets. (ii) Secondary markets (iii) Portfolio management firms