FINANCIAL MANAGEMENT 4 INDIVIDUAL ASSIGNMENT 2
ALL ASSIGNMENT MUST BE TYPES (No hand written assignment will be accepted)
Due date: 21/09/2016. No late assignment will be accepted
Any form of Copy work will result to zero
Question 1 (5 marks)
China America Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12
percent, and the required return on the market portfolio is 18 percent. The company plans to
pay a dividend of R2.45 per share in the coming year and anticipates that its future dividends
will increase at an annual rate consistent with that experienced over the 2001-2003 period.
Estimate the value of China America Manufacturing’s stock.
Question 2 (5 marks)
2. Milton Corporation recently paid a dividend of R1.70 per share, is currently expected to
grow at a constant rate of 5%, and has a required return of 11%. Milton Corporation has been
approached to buy a new company. Milton estimates if it buys the company, their constant
