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CIMAPRA19-F02-1 Exam - Topic 1 Question 5 Discussion

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.The current share price is $3.05.The cost of equity using the dividend valuation model is:
A) 12.4%
B) 11.9%
C) 7.4%
D) 6.9%

CIMAPRA19-F02-1 Exam - Topic 1 Question 5 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 5
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.

The current share price is $3.05.

The cost of equity using the dividend valuation model is:

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Suggested Answer: A

by Eladia at May 08, 2022, 11:08 PM

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Rosenda
7 months ago
Historically, 5% growth is solid, but what's the market saying?
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Felice
7 months ago
Wait, how can the cost of equity be only 6.9%? That seems low!
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Vincent
8 months ago
I'm leaning towards 11.9%, seems reasonable.
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Elbert
8 months ago
I think the cost of equity is definitely higher than 7.4%.
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Julian
8 months ago
The dividend is 20 cents, and growth is 5%.
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Theola
8 months ago
This one seems straightforward. Receiving components only when needed should reduce inventory, so I'll go with D.
upvoted 0 times
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Viva
8 months ago
Hmm, I'm a bit unsure about this one. I know WebLogic has a lot of configuration options, so I'll need to think through the different ways to set the deployment name.
upvoted 0 times
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