a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at a constant rate per year. Investors required rate of return is 18 percent. Calculate the price of the stock based on average growth of the stock, and justify your findings to take stock investment decisions. (CMP=77.50 Tk.) Year Dividend per share Growth rate 2014 3.25 Tk. 2015 3.65 Tk. 2016 3.95 Tk. 2017 4.25 Tk. 2018 5.30 Tk. 2019 4.40 Tk

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 12P: Calculation of gL and EPS Spencer Suppliess stock is currently selling for 60 a share. The firm is...

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Question

a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at a
constant rate per year. Investors required rate of return is 18 percent. Calculate the price of the stock
based on average growth of the stock, and justify your findings to take stock investment decisions.
(CMP=77.50 Tk.)
Year Dividend per share Growth rate
2014 3.25 Tk.
2015 3.65 Tk.
2016 3.95 Tk.
2017 4.25 Tk.
2018 5.30 Tk.
2019 4.40 Tk.
b. Explain different types of common stocks with basic features in light of BD stock market and major
challenges of DSE to build up investors’ confidence.
c. Briefly explain the steps in capital budgeting decision making process with constraints of
implementation stage.

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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