SK Telecom Company is a cellular telephone paging and computer communication services company in Seoul, South Korea. The company is traded on the Korea, New York, and London stock exchanges (NYSE: SKM). Sol Kim has estimated the normalized FCFE for SK Telecom to be 1,300 Korean won (per share) for the year just ended. The real country return for South Korea is 6.50 percent. To estimate the required return for SK Telecom, Kim makes the following adjustments to the real country return: an industry adjustment of +0.60 percent, a size adjustment of – 0.10 percent, and a leverage adjustment of + 0.25 percent. The long - term real growth rate for South Korea is estimated to be 3.5 percent, and Kim expects the real growth rate of SK Telecom to track the country rate.
A. What is the real required rate of return for SK Telecom?
B. Using the single - stage FCFE valuation model and real values for the discount rate and FCFE growth rate, estimate the value of one share of SK Telecom.