Shares of Volga Ltd. are being quoted at a price-earning ratio of 8 times. The company retains

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Shares of Volga Ltd. are being quoted at a price-earning ratio of 8 times. The company retains 50% of its Earnings Per Share. The Company's EPS.

You are required to determine:

(1) The cost of equity to the company if the market expects a growth rate of 15% p.a.

(2) The indicative market price with the same cost of capital and if the anticipated growth rate is 16% p.a.

(3) The market price per share if the company's cost of capital is 20% p.a. and the anticipated growth rate is 18% p.a.

Related Book For answer-question

Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

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Posted Date: Jun 24, 2023 08:43 AM

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Shares of Volga Ltd. are being quoted at a price-earning ratio of 8 times. The company retains

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To solve the given problems lets go through the calculations step by step 1 The cost of equity to th... View the full answer

Foundations of Financial Management

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