Answer Happy

(a) Hark plc. paid 80 pence per share as dividend to its
shareholders last year. The share price of Hark plc. was 500 pence
at the end of last year. Given the arithmetic return of the share
was 25% over last year. What was the share price at the beginning
of last year?
(b) Mark plc. is proposing a “one-for-five” rights issue. The
market price of the share is expected to be 320 pence after the
rights issue. what must be the discounted price of a newly issued
share? Given the current market price of the share is 360
pence.
(c) Calculate the present value of a 10-year ordinary annuity.
Given the annual payment will start one year from now at £1,500 and
market interest rate will remain at 5%.
(d) A five-year saving account offers customers 2% annual
interest rate. Mr Davies makes a deposit of £2,500 in this saving
account today, calculate the cash balance in his account five years
from now. [5 marks] (e) A financial claim offers annual payment of
£500 in perpetuity to investors. If the current market price of
this financial claim is £8,000, calculate the appropriate discount
rate to this financial claim? Assuming this financial claim is
priced fairly.