Mohini Kapadia is the portfolio manager of an India - based equity fund. He is

analyzing the value of Reliance Capital. Gupta has concluded that the DDM is

appropriate to value the company. During the past five years (fiscal year ending 31

March 2014 to fiscal year ending 31 March 2019), the company has paid dividends per

share of Rs.5.50, 6.50, 7.00, 8.00, and 9.00, respectively. These dividends suggest an

average annual growth rate in DPS of just above 13 percent. Gupta has decided to use

a three - stage DDM with a linearly declining growth rate in stage 2. He considers

reliance capital to be an average growth company, and estimates stage 1 (the growth

stage) to be 4 years and stage 2 (the transition stage) to be 8 years. He estimates the

growth rate to be 13 percent in stage 1 and 10 percent in stage 3. Gupta has estimated

the required return on equity for Reliance Capital to be 15 percent. Estimate the current

value of the stock.