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Perform a valuation exercise for Longreach Ltd which is listed on the ASX. Longreach Ltd currently pays a dividend of 25 cents per share. Longreach's

Perform a valuation exercise for Longreach Ltd which is listed on the ASX. Longreach Ltd currently pays a dividend of 25 cents per share. Longreach's estimated cost of equity capital is 9% p.a.

Required

  1. Estimate the price per share using the zero growth model. [5 marks]
  2. Assume a constant growth rate of 6% into perpetuity. What is the estimated price?[5 marks]

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