a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at a constant rate per year. Investors required rate of return is 18 percent. Calculate the price of the stock based on average growth of the stock, and justify your findings to take stock investment decisions. (CMP=77.50 Tk.) Year Dividend per share Growth rate 2014 3.25 Tk. 2015 3.65 Tk. 2016 3.95 Tk. 2017 4.25 Tk. 2018 5.30 Tk. 2019 4.40 Tk
a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at a constant rate per year. Investors required rate of return is 18 percent. Calculate the price of the stock based on average growth of the stock, and justify your findings to take stock investment decisions. (CMP=77.50 Tk.) Year Dividend per share Growth rate 2014 3.25 Tk. 2015 3.65 Tk. 2016 3.95 Tk. 2017 4.25 Tk. 2018 5.30 Tk. 2019 4.40 Tk
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 6P
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Question
a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at a
constant rate per year. Investors required
based on average growth of the stock, and justify your findings to take stock investment decisions.
(CMP=77.50 Tk.)
Year Dividend per share Growth rate
2014 3.25 Tk.
2015 3.65 Tk.
2016 3.95 Tk.
2017 4.25 Tk.
2018 5.30 Tk.
2019 4.40 Tk.
b. Explain different types of common stocks with basic features in light of BD stock market and major
challenges of DSE to build up investors’ confidence.
c. Briefly explain the steps in capital budgeting decision making process with constraints of
implementation stage.
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