1. Given the following information about Reliance Ltd., what is the required rate of return of its ordinary shareholders? The expected growth rate of dividends is 6.0 percent p.a., the current market price of its ordinary share is $48.50 and the last dividend paid to the firm’s ordinary shareholders was $3.12.
2. Susan Chan is planning to acquire a share and hold for one year. She expects to receive $3.50 in dividends and $25 from the sale of the share at the end of the year. What is the maximum price she would pay for the share today if she wanted to earn a 12% return?