1 Assessment 1 Assignment This Assignment Is Designed To Test Students On Topic 2 Share Valuation And On Topic 7 I 1 (58.48 KiB) Viewed 62 times
1 Assessment 1 Assignment This Assignment Is Designed To Test Students On Topic 2 Share Valuation And On Topic 7 I 2 (58.48 KiB) Viewed 62 times
1. Assessment 1 (Assignment) This assignment is designed to test students on Topic 2 (Share Valuation) and on Topic 7 (Investment Appraisal) For Question 1, students are assessed on the concepts of share valuation Students are expected to perform computations and to critically evaluate the approaches. For Question 2, students are expected to appraise the attractiveness of a capital asset proposal. The emphasis is on deriving the relevant cash flows so as to make a reasoned recommendation Question 1 marks) (15 Assume today is 31 December 2020. Fimm P, a gold mining company. just paid dividends to its common shareholders. It is expected to pay dividends of $ 9 million, $12 million $5 million and nil dividends for the next 4 years Four years from now, the estimated net profit after tax is $50 million. The company adopts the policy of not issuing preference shares. The expected price multiple for the year 2024 is 15 times of earnings. The cost of equity for Firm Pis 10 percent Required a. Compute the intrinsic value of Firm P's common shares. b. Critically evaluate the use of the Dividend Discount Model in valuing the shares of Firm P, and explain which alternative methods may be more appropriate Note: To show all workings with accompanying explanations. Word count requirement 500 (actual wordcount to be stated on the cover page of the assignment). Minimum number of references: 2.
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