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
Limitations of Credit Cards - Source of Finance Limitations of Credit Cards as a Source of Finance are as follow: i) These cards lead to overspending on the part of the hol

Price Earnings Ratio Price earnings (P/E) or ratio =  Market price per share (MPS)/Earnings per share                                     OR    = Market value of equity /Ea

Suppose the current yield curve is as follows: (a) Calculate the current market prices of two bonds with the following annual cash flows: Bond A: A coupon of $60 is due

Monitoring Costs - Agency Costs This is incurred to prevent undesirable managerial actions. They are meant to ensure that both parties live to the spirit of agency contract. T

Liquidity Ratios - Ratio Analysis It also identified as working capital ratios.  They show capability of the firm to meet its short term maturing financial obligation/recent l

How quickly could something like this be done? And how confidential is this? Has any student ever been caught using this service?

Partnerships - Types of Business Organisations Defination "The relationship, that exists with persons carrying on a business in common by a view of profit." Formati

Business Ethics - Objectives of Business Entity Connected to the question of social responsibility is the matter of business ethics.  Ethics are explained as the "standards of

Problem 1 a) Explain Trade Liberalisation and give your views whether emerging economies should adopt trade liberalization protectionist measures to attain economic growth.

The operating and cost data of ABC Ltd. are: Sales Rs. 20,00,000 Vari