Reference no: EM132715694

Questions -

a) Distinguish the differences between stock splits and stock dividends.

b) Recent dividend distributed RM1. Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will increase at a rate of 5% per year indefinitely. If the required return is 20%, calculate the stock.

c) Capital Bhd. just paid a dividend of RM2.00 per share on its stock. The dividends are expected to grow at a constant 6 percent per year indefinitely. If investors require a 13 percent return on Capital stock, calculate;

i) The current stock price

ii) The stock price in 3 years

iii) The stock price in 15 years