Reference no: EM131820427

Estimated share price question scenario. Kelly has examined the company and its competitors. Although Tech 1 has a technological advantage , Kelly's research indicates that its competitors are investigating other methods to improve efficiency. Given this Kelly believes Tech 1 technological advantage will only last five years. After this period the company is likely to slow down to the industry average. and so the industry average required return will be a more appropriate rate for valuation. Competitor 1: EPS: -0.20c, DPS: 0.04c, Share price: 3.25, ROE: 9.5%, required rate: 7.75%. Competitor 2: EPS: 0.31c, DPS: 0.14c, Share price$2.90, ROE: 10.5%, Required rate: 9.25%. Competitor 3: EPS: 0.16c, DPS: 0.16c, share price: $12.10, ROE: 10.25%, Required rate:9.00%. Competitor 4: EPS: 0.24c, 0.18c, share price: $7.05, ROE: 10.5%, Required rate: 8.75%. Also Tech 1 information: EPS: 0.35c, Return on equity: 18% required rate of return: 14%. growth rate of 7.20% and share price is $3.31. So, under Kelly's assumptions of tech 1's technological advantage only lasting 5 years and after this period the company growth is likely to slow down to the industry average, and so the industry average required return will be a more appropriate rate for valuation. Under Kelly's assumptions, what is the estimated share price? Please show workings.