Question 1

Find the value of following cases.

1. Assume the DPS of NEC firm is Rs. 20 per year infinitely. If investors require a 12% rate of return, what should be the value of stock?
2. Assume the last year DPS of NEC firm is Rs.15 and expected to grow at constant rate of 5% forever. If investors require a 10% rate of return, what should be the value of stock?
3. The Everest Company paid last a dividend of Rs. 10 per share, it is expected 4% at the end of first year. It is expected to grow 8% in second and third year. It is expected to grow at constant rate of 5% forever after three year. If the investors capitalization rate is 15%, calculate the value of stock today.