D Ltd expects annual demand of 52000 units for the first year expected to increase 5% for next 5 years and has 1850,000 shares outstanding having par $10 with total assets $20,000,000. Accounting department estimate for fixed costs is $450000 annually excluding depreciation on non-current assets having cost of $13,000,000, variable cost is $230 per unit. Straight line method of depreciation is to be used assuming useful life of 5 years. No further capital expenditure is expected during next 5 years. Finance department expects a constant growth rate in dividends year 5 onwards based upon recent 4 years average of expected data. The marketing department estimates that D Ltd will let the contract at a selling price of $460 per unit. If risk free rate is 11%, beta 0.50, market rate of return 20%, before tax cost of debt 12% weight of debt 7.5%, weight of equity 92.5% and face a marginal tax rate of 40% . Use discount factor of 10%. a) Compute fair price per share of D Ltd using dividend discount model and discuss under what circumstances its a good investments. b)Discuss equity valuation models