Calculate the following: (a) Hark pic. paid 80 pence per share as dividend to its shareholders last year. The share pric
Posted: Wed May 18, 2022 10:04 pm
Calculate the following:
(a) Hark pic. paid 80 pence per share as dividend to its
shareholders last year. The share
price of Hark pic. 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?
[5 marks]
(b) Mark pIc. 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
[5 marks]
(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%
[5 marks]
(d) A five-year saving account offers customers 2% annual
interest rate. Mr Davies makes
a deposit ot £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
(a) Hark pic. paid 80 pence per share as dividend to its
shareholders last year. The share
price of Hark pic. 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?
[5 marks]
(b) Mark pIc. 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
[5 marks]
(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%
[5 marks]
(d) A five-year saving account offers customers 2% annual
interest rate. Mr Davies makes
a deposit ot £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