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An investor received a dividend of Sh.1.50 in the current financial year on each of his ordinary shares. The par value per share is Sh.20. The annual growth rate in dividends is 8%. The current market price per share is Sh1.50 while the investor’s required rate of return is 20%.
Calculate the intrinsic value of each ordinary share.
Date posted:
April 5, 2022
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Kawaida Ltd. is currently engaged in an expansion programme. Consequently, the company has been retaining all its earnings to finance the expansion programme. The company’s management expects to resume the payment of dividends at the end of 3 years with a dividend payment of sh. 1 per share. The dividends will grow at an annual rate of 50% in years 4 and 5. Thereafter, the dividends will grow at a constant rate of 8% indefinitely. The required rate of return on the company’s stock is 15%.
Required:
The current value of the company’s stock.
Date posted:
March 30, 2022
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Ushindi Ltd. has recently issued a sh. 1,000, 9 percent convertible bond. The bond can be converted into 9 ordinary shares at the end of the five years. The current market price of the shares of Ushindi Ltd. is sh. 25 per share. The price is expected to grow at a rate of 10 per cent per annum. The investors’ required rate of return is 12%.
Required:
The current value of the bond.
Date posted:
March 30, 2022
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The 10% convertible loan stock of Nalyaka Ltd. is quoted at Sh.142 per Sh.100 par value. The earliest date of conversion is in 4 years’ time, at the rate of 30 ordinary shares per Sh.100 nominal loan stock. The share price is currently Sh.4.15. Annual interest on the stock has just been paid.
Required:
(i) The average annual growth rate in the share price that is required for the stockholders to achieve an overall rate of return of 12% a year compounded over the next 4 years, including the proceeds of conversion.
(ii) The implicit conversion premium on the stock.
Date posted:
March 30, 2022
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Max Enterprises Ltd. had the following pattern of earnings per share (EPS) over the last five years:
The company maintained a constant dividend payout ratio of 40%. The company's required rate of return is 13%.
Required:
The company's theoretical value of the share
Date posted:
March 30, 2022
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Malikia Guyo borrowed Sh.1, 000,000 from Huduma Bank at an annual compound interest of 14% on the reducing balance. The loan was repayable in annual instalments over a period of four years. The installments were payable at end of the year.
Required:
A loan amortisation schedule.
Date posted:
March 30, 2022
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Shadrack Chando borrowed Sh.80,000 from XYZ commercial bank at an interest rate of 1.25% compounded monthly. The loan is to be amortized using the reducing balance method and be repaid in 12 equal monthly installments payable at the end of each month.
Required:
A loan amortization schedule.
Date posted:
March 30, 2022
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John Matata has just borrowed Sh.220,000 from a bank payable at 12% per annum compounded annually to be repaid in six equal annual instalments.
These payments are to be sufficient to repay the principal amount together with interest.
Required;-
The loan amortization schedule.
Date posted:
March 30, 2022
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Explain four reasons that may drive a company to raise equity finance rather than debt finance.
Date posted:
March 30, 2022
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In relation to the financial objectives of a business entity, distinguish between the terms “maximizing” and “satisficing”.
Date posted:
March 30, 2022
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Explain three causes of conflict of interest between shareholders and debt holders.
Date posted:
March 30, 2022
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Executive compensation plans hinder value creation in a company. Citing three reasons, justify the above statement.
Date posted:
March 30, 2022
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State three sources of water for our bodies use.
Date posted:
March 21, 2022
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State two advantages which a constant body temperature gives endotherms.
Date posted:
March 21, 2022
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Explain why Escherichia coli (bacteria) cannot survive in the presence of oxygen.
Date posted:
March 21, 2022
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Why does our veins appear as blue and yet it carries blood which is red?
Date posted:
March 21, 2022
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Define pressure and state its SI unit
Date posted:
March 16, 2022
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The water level in a burette is 30cm3. If 55 drops of water fall from the burette and the average volume of one drop is 0.12cm3, what is the final water level in the burette?
Date posted:
March 15, 2022
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Name the instruments you would use to measure each of the following:
(a) The length of a football field
(b) The height of a 20 litre jerrican
(c) The circumference of your waist
Date posted:
March 15, 2022
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A body is acted upon by three forces as shown below
Date posted:
March 15, 2022
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Giving an example, define the term derived quantities
Date posted:
March 15, 2022
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The figure below shows the volume of water in a measuring cylinder before and after immersing a stone. If the mass of the stone is 125g, determine its density
Date posted:
March 15, 2022
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The student to give the advantages and disadvantages that arise to a company that uses floating charge as a security on debentures and also the situations under which a floating charge is crystalized.
Date posted:
March 14, 2022
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State and explain one gaseous impurity likely to be present in the gas jar containing hydrogen sulphide.
Date posted:
February 19, 2022
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Discuss the Physical Factors that Control Agricultural Distribution
Date posted:
January 18, 2022
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Describe the factors influencing population distribution in Africa
Date posted:
January 17, 2022
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Describe the origin and distribution of population in Africa
Date posted:
January 17, 2022
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Discuss the classifications of soil types in Africa
Date posted:
January 17, 2022
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Describe the Climatic Regions of Africa
Date posted:
January 17, 2022
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Describe the African Coastline
Date posted:
January 17, 2022