Example of dividend basis valuation, Finance Basics

Example of Dividend Basis Valuation

Company Laxmi Synthetics pays a dividend of 10% on its Sh.60 par value ordinary shares.  This company uses a discount rate of 15%.  Assuming no growth, calculate the value of its ordinary share if there's growth of 5%, what would be the value of this company's ordinary shares.

a) P0 =  D0 / Ke           

    P0 =  6 /15%

          = Sh.40 (no growth)                                                                                                   

b) P0 =  6(1.05) /0.15-0.05

         = Shs.63 (5% growth rate)

Posted Date: 1/31/2013 2:01:25 AM | Location : United States







Related Discussions:- Example of dividend basis valuation, Assignment Help, Ask Question on Example of dividend basis valuation, Get Answer, Expert's Help, Example of dividend basis valuation Discussions

Write discussion on Example of dividend basis valuation
Your posts are moderated
Related Questions
Drawback of Stock Repurchases 1. High price A company may find it not easy to repurchase shares at their recent value and price paid may be higher to the detriment of rem


Assume a levered firm has a current value of $650,000,000. The firm currently has $259,258,527.20 in debt. Without debt, firm value (i.e. VU) would be $580,000,000. Ignore the cost

Classification of Preference Share Capital i) Redeemable Class Redeemable preferential shares are bought back via Issue Company after minimum redemption duration however

Example of NPV Value A company is faced along with the following five (5) investment opportunities as:   Cost NPV P.I = Total P.v

From the following selected operating date, determaine the DOL. Which company has the greater amount of business risk? Why? Particulars A Ltd

Example of NPV Method Resolution limited intends to purchase a machine worth Shs.1, 500,000 that will have a residue value Shs.200,000 after 5 years helpful life. The saving

2 Questions QUESTION #1 LAPTOP SELECTION Jonna is in market to buy a new laptop. Six different machines are under consideration. All laptops are essentially the same, but they v

what is the exact nature of IDB sukuk

Investment Bank A lending entity is engaged in all the phases of privacy offerings the including managing, underwriting, trading, and the distributing new security issues.