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Both parts please Aksh Optima, is a company operating in a mature industry. Presently, its EPS is Rs. 6.75. Aksh's dividend pay-out ratio is 60%
Both parts please
Aksh Optima, is a company operating in a mature industry. Presently, its EPS is Rs. 6.75. Aksh's dividend pay-out ratio is 60% and ROE is 10% and both of these are expected to be the same in the near future. The beta of the company is 0.86. The treasury bill rate is 9.86% and the average return from the market is 15.26%. You are required to: i. Calculate the intrinsic value of Aksh Optims shares using Dividend Discount Model (DDM). ii. Calculate the intrinsic value of Aksh Optima shares using DDM while considering that the company acquires another company and as a result dividends grow at 20% for the next three years and return to the constant historical growth rate from 4th yearStep by Step Solution
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