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Find market price with the same cost of capital

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Reference no: EM132758800

Shares of Volga Ltd. are being quoted at a price-earning ratio of 8 times. The company retains 50% of its Earnings Per Share. The Company's EPS.

You are required to determine:

(1) the cost of equity to the company if the market expects a growth rate of 15% p.a.

(2) the indicative market price with the same cost of capital and if the anticipated growth rate is 16% p.a.

(3) the market price per share if the company's cost of capital is 20% p.a. and the anticipated growth rate is 18% p.a.

Reference no: EM132758800

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