F2 Cost of Long Term Funds
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1
How do you calculate the cost of equity if we are assuming no growth in dividends
2
How do you calculate the cost of equity if we assume dividends grow at a constant rate
3
What is the cost of equity?
The return that ordinary shareholders (equity investors) require on their investment.
4
How do you find the ex-div market value if the dividend is about to be paid?
Ex-div market value = Cum-div market value - Dividend to be paid.
5
Explain Ex Div and Cum Div market price
6
How do you calculate the future growth rate of dividends using the averaging method
to put this in your calculator do (0.16/.01) ^ (1/5) press equals then -1 then multiply by 100
7
How do you calculate the dividend growth rate using the profit retention rate method
8
do you deduct tax for preference shares
no because they do not attract tax relief
9
How do you calculate the yield of an irredeemable bond
10
when calculating weighted average cost of equity do you adjust for tax
yes on items that attract tax relief like bank loan interest or interest on bonds
11
How do you calculate the post tax cost of irredeemable bonds
12
How do you calculate the yield to maturity rate of redeemable bonds
13
How do you calculate the post tax cost of redeemable bonds
14
how do you calculate the post tax cost of convertible bonds
similar to redeemable bonds as they need IRR calculation, first step means calculating the cash value of shares at redeemable point and choosing the higher of that or the non convertble amount to use in the calculation
15
How do you calculate the post tax cost of bank borrowings
16
How do you calculate the weighted average cost of capital
17
GG Co has a cost of equity of 25%. It has 4 million shares in issue, and has had for many years.
Its latest dividend has just been announced of $423,000. Dividends are expected to continue to grow at a rate of 17.8% into the future. According to the dividend valuation model, what should be the ex- dividend share price for GG Co?
Its latest dividend has just been announced of $423,000. Dividends are expected to continue to grow at a rate of 17.8% into the future. According to the dividend valuation model, what should be the ex- dividend share price for GG Co?