Consider the following scenario for Chariot Limited (CHR Ltd). CHR Ltd's most recently paid annual dividend was $0.45 per ordinary share. CHR Ltd ordinary shares currently sell for $9.75 in the stock market. Estimated constant growth rate of earnings and dividends is 2.2% per year, while the required rate of return (based on CAPM) is 6.8% per year.

What is your valuation of the CHR Ltd's ordinary share?

Answer 1

Choose...

$4.42

$10.45

$6.61

$9.78

$0.45

$3.09

$8.25

$7.77

$5.11

$10.00

$6.76

Yes

$9.75

$0.75

No

Based on your estimate of the share value, would you buy CHR Ltd's shares in the stock market?

Answer 2

Choose...

$4.42

$10.45

$6.61

$9.78

$0.45

$3.09

$8.25

$7.77

$5.11

$10.00

$6.76

Yes

$9.75

$0.75

No