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Make note of dividend payments made for the periods

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Reference no: EM132622699

1. Annexed are the Annual Reports for the Knutsford Express Company Limited (KEX). Years 2019 and 2017. Please see appendix I. You will need four (4) years comparative reporting information i.e. financial years ended May 31, 2019, 2018, 2017 and 2016. From the annual reports and any other relevant, reliable, and credible sources1 , identify and make note of dividend payments made for the periods under review.

2. Assume and apply the following dividend growth rates for the next 3 years: i. 25% (from current year i.e. 2019) ii. 40% iii. 70%

3. Ascertain and justify (including reference and/or benchmark, if needed) the terminal growth rate (g) for the projected dividends.

4. Determine the cost of capital using CAPM. Each variable must be adequately justified (including reference and/or benchmark, if needed). The Beta has been provided in appendix II.

5. Using the data gathered above, determine the value of KEX stock.

6. The Board of Directors questioned the valuation method citing several criticisms. It was therefore decided to employ another method. Oliver Townsend, the CEO, believes and strongly anticipates a 12% increase in group's post-tax profits attributable to shareholders. The Jamaica Stock Exchange data revealed that the industry/market has a Price to Earnings (P/E) of 21.67 times. Determine the value of KEX using the P/E multiple method.

Beta =0.684

https://www.jamstockex.com/wp-content/uploads/2017/09/Knutsford-Express-Annual-Report-2017.pdf

https://www.jamstockex.com/knutsford-express-services-limited-ptl-2019-annual-report/

Reference no: EM132622699

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