a. Suppose you know that a company’s stocks currently sell for GH₵ 64 per share and the required return on the stock of this company is 12%. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in dividends, what is the current dividend per share?
b. Annungyeni Limited, leaders in the fast food business in the Upper East Region of Ghana, has consistently paid the following dividends in the past 5 years: GH₵ 0.53, GH₵ 0.60, GH₵ 0.72, GH₵ 0.864, and GH₵ 1.0368. If the company just paid a dividend of GHS 2.03 per share and pledges to indefinitely grow this dividend at 6.5% from next year onward, what is current price of its stock assuming it’s beta is 1.2, the return on T-Bills is 7%, and the market risk premium is 16%.
c. Aquatic Inc. a beverage manufacturer in Charikpong is currently selling its 12 year, GHS 1, 000 par, semi-annual coupon bonds for GHS 983. If these bonds have a yield to maturity of 14%, what is the coupon rate on these bonds?