Financial Management Assignment

Added on -2020-02-23

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Financial Management Assignment2017
1By student name ProfessorUniversityDate: 01 September, 2017.1 | P a g e
2ContentsQuestion No. 1.............................................................................4Question No. 2.............................................................................4Question No. 3.............................................................................4Question No. 4.............................................................................42 | P a g e
3Question 1a)Amount ($)ParticularsWorkings2016-172017-18Total Income600,000750,000Dividend Payout Ratio70%70%Dividend Paid (70% of total income)420,000525,000William Brown ownership in the Company12%12%Dividend Received by him (12% of dividend)50,40063,000Total Amount required in Mid 2018100,000Less: Amount utilised out of dividend pay out of 2017-1863,000Balance37,000Amount to be invested in Mid 2017 at 9% pa(37000/1.09)33,945Amount that can be consumed (50400-16455)16,455b)ParticularsWorkingsAmt (in $)Expected Dividend in 2020(1.2*1.2*1.15*1.1)1.82Expeced Price in 2020(1.911/(0.12-0.05))27.30Using the formula : D1/(Re - g)Where, D1 = Expected Dividend = 1.82*1.05 = 1.911Re= 12% = .12g= growth = 5% = .05Expected Price in 2017 (present value of Dividend for 2018, 2019, 2020 and price of shares in 2020)((1.2*1.2)/1.12)+ ((1.2*1.2*1.15)/(1.12^2)) + ((1.2*1.2*1.15*1.1)/ (1.12^3)) + 23.333 | P a g e

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