MPF753 Finance Assignment docx

Added on -2020-02-18

| 10 pages| 2886 words| 34 views

Trusted by 2+ million users,
1000+ happy students everyday

Showing pages 1 to 3 of 10 pages

FINANCEBHP, CBA & WOWSTUDENT ID:[Pick the date]
FINANCEa)The three companies that are selected for this task are as follows.BHP Billiton LimitedCommonwealth Bank of AustraliaWoolworths Limited The dividend payment history for the above three stocks has been obtained from DatAnalysisPremium database for the time period starting on July 1, 2007 and ending on June 30, 2017.The dividend payment history is highlighted in the table indicated below.b)In order to compute the dividends paid for each company on an annual basis, the interimdividend would need to be annualised as 6 month of interest would be received taking intoconsideration an applicable rate of interest as 2.72% p.a. The relevant formula andapproach for annualising an interim dividend is indicated below.Annualised dividend = Interim Dividend *(1+ 0.0272)0.5In the above formula, the time period is six months or 0.5 years.Based on the above formula, the annual dividend for the last ten years for the selectedstocks is summarised in a tabular manner indicated below.
FINANCEc)The growth rate of dividend for the three selected companies has been summarised in thetable highlighted below based on which the average dividend growth rate has beencomputed.Based on the average dividend growth rate during the period, it is apparent that forWoolworths, the average dividend growth rate is way too low which is being adverselyimpacted due to the significant drop in dividend in FY2016. For BHP Billiton, the averagedividend growth rate seems way too high which is attributed to the abnormal jump in FY2017which is an aberration rather than being the normal trend. However, for CBA orCommonwealth Bank, the average dividend growth represents a realistic value which wouldbe used as a proxy growth rate for dividend.For BHP Billiton, there was a severe drop in dividend in FY2016 owing to the loss that thecompany had made. Further, the high growth in dividend in FY2017 is also attributed to thedip in dividends in FY2016. Hence, these two values would be excluded from the averagedividend growth rate computation. Further, years FY2009 and FY2015 are also not being

Found this document preview useful?

You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss

Premium

$45

Q&A Library Access

Chat support

12

Document Unlocks

4

Answer Unlocks

Students who viewed this