solution to Walter's approach and foreign exchange quote

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srinivas (Querist)
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08 November 2008 3. (a) Walter’s Approach:

A company has a book value per share of Rs. 150. Its return on equity is 15% and it follows a policy of retaining 60% of its earnings. If the opportunity cost of capital is 18%, what is the price of the share today. According to Walter’s approach.

(c) Foreign Exchange:
The price of the pound sterling was quoted at $1.80 in New York and on the same date the DM spot rate was quoted at $.40.
• What would you expect the price of the pound to be in Germany?
• If the pound qas quoted in Frankfurt at DM 4.40/pound, what would you do to profit from the situation?

please send your answers to psrinivas1@in.com

Deepak Agrawal

Deepak Agrawal (Expert)
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11 November 2008 3.a)
Provide EPS amount.

Formula is: EPS amount*60%*18/15

KAAPIL

KAAPIL (Expert)
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16 January 2009 Both questions are solved in S D Bala.

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