The Innovate Corporation has just invented a cheap form of energy. Investors with a 20% required rate of return expect this company to grow at an accelerated rate of 40% per year for the next 3 years and then continue at a constant growth rate of 15% per year. What value would the investors be willing to pay for the common stock of the most recent annual dividend was RM3.00 per share?
You deposit RM10,000 today into a retirement account that earns 5% annual interest. You continue to deposit RM10,000 each year for a total of 40 payments. One year after the last deposit, you make your first annual withdrawal, and continue to receive level annual cash flows for 20 total payments. what is your annual withdrawal?
How do you compute the beta of common stock and what does it mean? Discuss the limitations of using beta to measure systematic risk of individual stocks.
Source: Corporate Finance First Semester Examination Academic Session 2011/2012, Master of Business Administration, Universiti Sains Malaysia
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