Reference no: EM132531542

q1) Mr. Ahmed is planning to make an additional investment at the end of each year for his retirement in 10 years right now. Ahmed plans to invest Rs.10,000 each year for first 3 years, then Rs.15,000 each year for next 3 years, thereafter Rs.20,000 each year next remaining 4 years. If a rate of return 10% can be earned on these investment, how much will Mr. Ahmed have at end of 10 years?

q2) ABC Company is experiencing a rapid growth in the recent past. Earning and dividends are expected to grow at a rate of 30% during next 2 years and subsequently at 20%in third year and thereafter it will normalize to grow at a constant rate of 7%. The last dividend paid was Rs.3.00 per share and the required rate of return on the stock is 16%.

Required:

Compute the current market price of stock today?

q3) You are considering an investment in ABC Co.'s common stock. The stock currently sells for $26.75 a share. The stock is expected to pay a dividend of $2 a share at end of this year. Company's beta is 1.50 and the risk free rate is 6.0% and the market rate of return is 12%. The dividend is expected to grow at a some constant rate.

Required:

What is expected growth rate ?

What stock price would be at end of 3 year from now.

q4) ABC Mining company's coal reserves are being depleted, so its sales are falling. Also its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5% per year.
Company paid last dividend $4 per share and company cost of capital is 10%.

Required:

What is the value of ABC Company's stock.