PT AAGG in this year's final report shows that the available profit for shareholders is Rp 18 billion

and the number of shares outstanding 10 million. The company sets a dividend payout ratio of 40%. Data

industry averages show the price earning ratio (P / E ratio) 8x. Shareholders set required rates

of return of 14%.

a. What is AAGG's share price if calculated using market valuation (P / E ratio)!

b. Use the dividend discount model to determine the intrinsic value of AAGG shares, if:

1) A constant dividend growth rate of 4% per year forever.

2) A dividend growth rate of 9% per year for 2 years and thereafter 4% per year forever.

c. Based on the answers to question b, explain the effect of changes in dividend growth rates on

stock intrinsic value!