Presentation: 1500 words +_ 10%, typed in word .doc – essay format Title page, introduction, suitable headings and subheadings, conclusions/recommendations, reference list (Harvard – Anglia style), attachments e.g. spreadsheets
Research requirements: Students must support their analysis and recommendations with the text and a minimum of 6 current, relevant, academic journal articles. Additional sources may also be used but students need to demonstrate awareness of the academic reliability of such sources.
“If the efficient-market hypothesis is true, the pension fund manager might as well select a portfolio with a pin.” Explain why this is not the case. 1000 words.
Dill Ltd current share price is $20 and it has just paid a $2.50 dividend. Dividends of Dill are expected to grow at the rate of 6% per year.
- What is an estimated return that shareholders of Dill expect to earn?
- Dill Ltd also has preference share outstanding that pays fixed dividend of $2 per share. If preference stock is currently priced at $16, what is the return that preference share holders expect to earn?
- Five years ago Dill Ltd issued 13 year bond with face value of $1000 and coupon rate of 7.5% p.a. The price of these bonds is currently $950. What is Dill’s relevant cost of debt?
- Dill has a 12% Bank loan and the current outstanding balance on the loan is $12,000,000, interest on the loan is compounded monthly.
- Dill Ltd has 5000,000 ordinary shares outstanding and 1,500,000 preference shares outstanding, and its equity has a total book value of $50,000,000. Its liability has a book value of $25,000,000. If Dill’s ordinary and preference shares are priced as in parts (A) and (B) above, what is the market value of Dill’s assets?
- What is Dill’s weighted average cost of capital (WACC)
- Tax rate is 30%.