MsManners Catering (MMC) Has Paid a Constant R1

question 29

Multiple Choice

Ms.Manners Catering (MMC) has paid a constant R1.50 per share dividend to its ordinary shareholders for the past 25 years.MMC expects to continue this policy for the next two years, and then begin to increase the dividend at a constant rate equal to 2 percent per year into perpetuity.Investors require a 12 percent rate of return to purchase MMC's ordinary shares.What is the market value of MMC's ordinary shares?

• A) R14.73
• B) R15.00
• C) R15.58
• D) R15.30
• E) R12.20

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Definitions:

Revenue Account

An account that tracks the income earned by a company before any expenses are deducted, often classified by source.

Accounting Process

A series of procedures and steps taken for the purpose of accounting, including recording, classifying, and summarizing financial transactions.

Accounting Equation

The foundational principle of accounting, stating that assets equal liabilities plus equity.

Source Documents

Original records that contain the details of a business transaction, such as invoices, receipts, and contracts.