M/s Y Ltd has paid dividend of Rs.2.5 on a share with face value of Rs. 10 in the financial year...

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M/s Y Ltd  has paid dividend of Rs.2.5 on a share with face value of Rs. 10 in the financial year ending 31st March 2015......
	
Document Preview: M/s Y Ltd  has paid dividend of Rs.2.5 on a share with face value of Rs. 10 in the financial year ending 31st March 2015.The details are :-Current Market price of  shareRs. 60Growth rate of earnings and dividends 10%Beta of share 0.75Average Market return15%Risk free rate of return9%Calculate the intrinsic value of shareIntrinsic  Value  Po =D1/(k-g)Using CAPM 	K=Rf + (Rm-Rf)x BRf-Risk free rate od returnRm=Market returnB=Beta of SecurityK=9% XXXXXXXXXX%- 9%)  =13.5%P= 2.5x 1.1/ XXXXXXXXXX)	    =2.75/ 0.035=Rs. 78.57

David · Accepted Answer

Intrinsic  Value  Po =D1/(k-g) 
Using CAPM    
K=Rf + (Rm-Rf)x B 
Rf-Risk free rate of return 
Rm=Market return 
B=Beta of Security 
K=9% + 0.75 (15%- 9%) 
  =13.5% 
P= 2.5x 1.1/ (0.135-0.10)  
    =2.75/ 0.035 
=Rs. 78.57

M/s Y Ltd has paid dividend of Rs.2.5 on a share with face value of Rs. 10 in the financial year ending 31st March 2015...... Document Preview: M/s Y Ltd has paid dividend of Rs.2.5 on a share with...

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