Reference no: EM133183161

Questions -

Q1. The Hong Kong Corporation has a beta of 1.25 and a book value of $11,500,000 at the beginning of 2021. Using a risk free rate of return of 2.5% and a market rate of 12%, what is Hong Kong Corporations's Required income for 2021?

A. $2,012,500

B. $1,653,125

C. $1,745,625

D. $1,365,625

Q2. A company has a book value of $6 billion, a market cap of $9 billion, its dividend payout percentage is 3.80% and its operating profit is 20.6%. What amount does this equate to using the Buffett formula?

A. 2.7

B. 4.1

C. 11

D. 16.3

Q3. Dividend Valuation Approach - An analyst's forecast for a company's dividends for the next three years are:

D1 = $8,800 D2 = $9,100 and D3 = $10,400

If the analyst uses an Re = 12% and g = 3% for the company, what would be the continuous growth (in dollars) for the company using the dividend approach model?

A. $94,956

B. $119,022

C. $22,566

D. $85,016