a
Price = Dividend in 1 year/(cost of equity - growth rate) |
36 = 1.75/ (Cost of equity - 0.05) |
Cost of equity% = 9.86 |
b
As per DDM |
Price(1-flotation %)= Dividend in 1 year/(cost of equity - growth rate) |
36*(1-0.12) = 1.75/ (Cost of equity - 0.05) |
Cost of equity% = 10.52 |
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