Calculate the share value of the unlisted company b

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Valuation based on shareholders' rate of return earned from a listed company.

The following information relates to a listed Company A. Statistics of the company, Company A, to be valued:

Dividend/share just paid = 12c
Historical dividend growth rate = 5%/year. This is expected to be maintained in the future.
Statistics of a suitable listed company (same business and same gearing): Share price = $2.40
Dividend just paid = 22c
Historical dividend growth rate = 10%/year. This is expected to be maintained in the future. Company B is unlisted and want to know the valuation of the business for strategic planning purposes.

Required:

Problem 1: Calculate the share value of the unlisted Company B which operates in the same industry with Company A. Show all workings.

Reference no: EM132928410

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