What will be the value of the stock of Dandiya Enterprises

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Question - What will be the value of the stock of Dandiya Enterprises?

The second client is Mr. Selva also an individual investor who swears by equity and is sometimes swayed by market buzz. He invested in the stock of Dandiya Enterprises whose promoter is very close to the government. Dandiya paid a dividend of Rs 5/- just a while ago and the market buzz is the incumbent government will lose to the opposition party in the elections whose results are awaited. Because of the adverse government, Dandiya Enterprises will experience a negative growth rate of 8% P.A. in the forthcoming five years. In the subsequent years the stock will grow perpetually at a long-term growth rate of 15% per annum. If the required rate of return is 18% what will be the value of the stock with these changes.

Reference no: EM132596754

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