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Compute the intrinsic value of firm ps common shares

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Question - Assume today is 31 December 2020. Firm P, a gold mining company, just paid dividends to its common shareholders. It is expected to pay dividends of $ 9 million, $12 million, $5 million and nil dividends, for the next 4 years.

Four years from now, the estimated net profit after tax is $50 million. The company adopts the policy of not issuing preference shares. The expected price multiple for the year 2024 is 15 times of earnings. The cost of equity for Firm P is 10 percent.

Required - Compute the intrinsic value of Firm P's common shares.

Reference no: EM133077666

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