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A share of common stock of Murni Bhd is paid a dividend of RM1.00. If the expected growth rate for this stock is 7%, and if investors’ required rate of return is 12.5%, calculate the stock price? (3 marks)
b. Samudra Bhd’s dividend in the next year is expected to be RM5, and dividends are expected to grow at 10% infinitely. The beta of the stock is 1.5. Currently, the market risk premium for the stock is 8%, and the 3-month T-bill rate is 6%. Samudra Bhd pays dividends annually at year end. Calculate the price of Samudra Bhd stock 3 years from now. (7 marks)
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