What is the present value of company-equity valuation method

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ABC Co. With existing assets alone expects to generate annual income of $50,000 perpetually. It has 30,000 shares outstanding now and plans to issue 4,500 new shares one year from now at a price of $8.00 per share. The company’s investment opportunities are such that the return on the new equity capital is expected to be 20% per annum. If investors require an annual return of 10%, what is the present value of the company? Show your computations using two (2) possible equity valuation methods and give each name of the valuation method before each computation.

Reference no: EM13825957

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