FIN2102: You are considering investing in HOG REIT Suppose it is currently undergoing expansion: Financial Management Report, IIU, Malaysia

School

INTI International University (IIU)

*We aren't endorsed by this school

Assignment Type

Individual Assignment

Subject

FIN2102: Financial Management

Uploaded by Malaysia Assignment Help

Date

05/07/2022

Question 1

(a) You are considering investing in HOG REIT. Suppose it is currently undergoing expansion and is expected to remain its cash dividend while expanding for the next 3 years. Its current dividend is RM1.50 per annum. After the expansion is completed, higher earnings are expected to result causing a
30% increase in dividends each year for 4 years. After that, the dividend
growth rate is expected to be 3% per annum forever. Given that T-Bill is yielding 5%, the market return is 10% and the beta of the stock is 1.6

(i) Calculate the required return for HOG REIT’s common stock.

(ii) Based on the required return that you obtained in (i), what is HOG REIT’s n stock worth today?

(iii) If the current price of HOG REIT’s stock is RM30, would you buy the stock?

(b) In December 2021, The AOU reports that there are overruns in the construction costs of two projects ‘The Disaster Management and Crisis Institute (IPKBN) and a Royal Malaysian Navy (RMN) college training center’ which have cost Malaysian taxpayers RM22.8mil, the Auditor-General’s Report 2020 revealed. The third series of the Report drew attention to the RM12.65mil overruns in building the IPKBN complex, which was originally estimated to cost
RM77.59mil. ‘This was due to weak planning by the Public Works Department regarding the design and scope of work, unforeseen events at the construction sites, and problems with increases in the price of building materials,” said the report. In response to this news, the cost of capital is necessary to make a project, such as building a new factory, construction and worthwhile. When analysts and investors discuss the cost of capital, they typically mean the weighted average of a firm’s cost of debt and cost of equity blended together. Explain further.

Get Solved Your Assignment( variable) and Earn A+ Grade!

Get Help By Expert

Students of Malaysia can directly ask to do my assignment cheap on FIN2102: Financial Management by the experts of Malaysia assignment help. our well educated writers provide the finance assignment help and accounting assignment help at an nominal price by the deadline.

Answer

UP TO 15 % DISCOUNT

Instant Paper Writing Services by Native Malaysia Writers

Plagiarism Free Solutions
100% Original Work
24*7 Online Assistance
Native PhD Experts
Hire a Writer Now
Convincing Features
Plagiarism Free Report
On-Time Delivery
Native Writers
A+ Quality
100% Confidential
24*7 Online Assistance

Get these features included in Your Assignment

Get Assistance for Assignments, online Exam, and Projects Writing