Friends, please solve this question which was asked in Nov 11 Exam of SFM :
Q1 (c) A co. has a book value per share of Rs. 137.80.Its return on equity is 15% and follows a policy of retaining 60% of its annual earnings. If the opportunity cost of capital is 18%, what is the price of its share?[adopt the perpetual growth model to arrive at your solution].
According to me the answer should be Rs. 91.867, but I am not sure. If I am wrong then please provide me the solution.
Your answer is approximatley same. Refer attached file for suggested answer for SFM.
(Source: Gurukripa)
Thanks Krishna,but I am not able to open this file as my adobe reader is not supporting it . If my answer is approximately same then its ok
ur answer is right as per suggested answers bt can any1tell why nt growth taken 4 calculating D1...??
| Originally posted by : LALIT WADHWA | ||
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ur answer is right as per suggested answers bt can any1tell why nt growth taken 4 calculating D1...?? |
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Lalit , I am also having the same question
CAclubindia
