a.The current price of Yusof Corporation stock is RM26.50 per share. Earnings next year should be RM2 per share and it should pay a RM1 dividend. The P/E multiple is 15 times on average. What price would you expect for Yusof Corporation’s stock in the future?
b.You are planning to purchase the stock of Tee’s Inc. and you expect it to pay a dividend of RM3 in 1 year, RM4.25 in 2 years, and RM6.00 in 3 years. You expect to sell the stock for RM100 in 3 years. If your required return for purchasing the stock is 12 percent, how much would you pay for the stock today?
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