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Compute the expected valuation of the company

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Reference no: EM132900005

A company paid a dividend of $250,000 this year. The current return to shareholders of companies in the same industry is 12%, although it is expected that an additional risk premium of 2% will be applicable to the company, being a smaller and unquoted company.

Required:

Problem 1: Compute the expected valuation of the company, if:

1.1. The current level of dividend is expected to continue into the foreseeable future, or
1.2. The dividend is expected to grow at a rate of 4% p.a. into the foreseeable future.

Reference no: EM132900005

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