a) Kepsut Inc. follows a policy of distributing 35% of its profits and investing the rest in the operations of the company. The average profitability of its assets is 20% and the current year dividend per face value of 1L is 35%. Compute the intrinsic value of a stock of this company for an investor whose minimum required rate of return is 25%. 

b) Compute the value of this stock one year later under the same assumptions.

Answer rating: 100% (QA)

a Face value 1L Divdiend rate 35 Current dividend D0 135 035 Payout ratio 35 Profitability ... View the full answer