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Examen

FIN3701 Assignment 2 (ANSWERS) Semester 1 2024 - DISTINCTION GUARANTEED

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Well-structured FIN3701 Assignment 2 (ANSWERS) Semester 1 2024 - DISTINCTION GUARANTEED. (DETAILED ANSWERS - DISTINCTION GUARANTEED!). QUESTION 1 [10 marks] Bonga currently has a portfolio of ordinary shares representing several different companies. Bonga considers it to be a well-balanced investment portfolio, but he wants to reduce the overall risk of the portfolio a bit more by including ordinary shares from Titan Mining Corporation. The following information on Titan Mining Corporation is available: For the period 2017 to 2020, the company paid the following dividends per year respectively: R3,14; R3,55; R3,89; and R3,95. The 2021 dividend is expected to increase by the average growth rate of the dividends between 2017 and 2020, and the dividend will increase by 10% per year indefinitely from 2022 onwards. Bonga requires a return of 15% on his investment portfolio and is not prepared to pay more than R52,00 per ordinary share of Titan Mining Corporation. REQUIRED: 1.1 Calculate the current price of Titan Mining Corporation’s ordinary share. (8 marks) 1.2 Should Bonga purchase Titan Mining Corporation shares to include in his investment portfolio? Provide reasons for your answer. (2 marks)

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Subido en
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2023/2024
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FIN3701
Assignment 2 Semester 1 2024
Unique Number: 505104
Due Date: 24 April 2024

QUESTION 1 [10 marks]

Bonga currently has a portfolio of ordinary shares representing several different
companies. Bonga considers it to be a well-balanced investment portfolio, but he wants
to reduce the overall risk of the portfolio a bit more by including ordinary shares from
Titan Mining Corporation.

The following information on Titan Mining Corporation is available:

For the period 2017 to 2020, the company paid the following dividends per year
respectively: R3,14; R3,55; R3,89; and R3,95. The 2021 dividend is expected to
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