Dividend discount model

D$1=0\mathrm{.}60$

Ke $=0\mathrm{.}12$

g $=0$

Stock Value$=$D$1$Ke$$g$=0\mathrm{.}600\mathrm{.}120=$$$5$

b$.$ Residual Income model

Residual Income$=$EPS$($k$$Book Value$)=0\mathrm{.}60(0\mathrm{.}126)=$$$0\mathrm{.}12$

Where,

Book Value $=$ $$6$

Residual Income $=$$$0\mathrm{.}12$

Number of Shares $=1$

Stock Value$=$Book Value$+$Residual IncomeNumber of Shares$=$$$6+$$$0\mathrm{.}121=$$$5\mathrm{.}88$

Explanation:

The Stock value is the price of the share of a company's ownership that people are willing to pay for it in the stock market. The stock value of protected steel corporation has been calculated by using dividend discount model and residual income model.

Answer

a$.$ Value of stock based on the dividend discount model is $$5$

b$.$ Value of stock based on the residual income model is $$5\mathrm{.}88$