Determine the indicated market price per share, Financial Accounting

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Q. Determine the indicated market price per share?

Your company's share is quoted in the market at Rs.20 Presently. The company pays a dividend of Rs.1 per share and the investor's market expects a growth rate of 5% per year.

a. Evaluate the company's equity cost of capital;

b. If the anticipated growth rate is 6% p.a., determine the indicated market price per share;

c. If the company's cost of capital is 8% and the anticipated growth rate is 5% p.a., evaluate the indicated market price if the dividend of Rs.1 per share is to be maintained.


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