Q. Determine the indicated market price per share?
Your company's share is quoted in the market at Rs.20 Presently. The company pays a dividend of Rs.1 per share and the investor's market expects a growth rate of 5% per year.
a. Evaluate the company's equity cost of capital;
b. If the anticipated growth rate is 6% p.a., determine the indicated market price per share;
c. If the company's cost of capital is 8% and the anticipated growth rate is 5% p.a., evaluate the indicated market price if the dividend of Rs.1 per share is to be maintained.