FIN3701 Assignment 2 Semester 1 2024 ;100 % TRUSTED workings, explanations and solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)...........
QUESTION 1 [10 marks] Bonga currently has a portfolio of ordinary shares representing several different companies. Bonga...
Bonga currently has a portfolio of ordinary shares representing several different companies.
Bonga considers it to be a well-balanced investment portfolio, but he wants to reduce the
overall risk of the portfolio a bit more by including ordinary shares from Titan Mining
Corporation.
The following information on Titan Mining Corporation is available:
For the period 2017 to 2020, the company paid the following dividends per year
respectively: R3,14; R3,55; R3,89; and R3,95.
The 2021 dividend is expected to increase by the average growth rate of the dividends
between 2017 and 2020, and the dividend will increase by 10% per year indefinitely from
2022 onwards. Bonga requires a return of 15% on his investment portfolio and is not
prepared to pay more than R52,00 per ordinary share of Titan Mining Corporation.
REQUIRED:
1.1 Calculate the current price of Titan Mining Corporation’s ordinary share. (8 marks)
1.2 Should Bonga purchase Titan Mining Corporation shares to include in his investment
portfolio? Provide reasons for your answer. (2 marks)
KINDLY NOTE THAT THERE ARE TWO COMPULSORY ASSIGNMENTS FOR THE FIRST
SEMESTER.
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