Q3. An analyst estimated the following information regarding Trident Company Ltd. Current share price: Rs 150
Recent dividend/share: Rs 40
Earnings / share: Rs 10
Return on Equity: 32%
Required Rate of Return: 23%
Answer the following:
1. Use the Gordon’s Model to Estimate the Intrinsic value of the stock. Based on the
intrinsic value, is the company overvalued, undervalued or fairly valued?
2. Calculate the Intrinsic value, if the growth rate is lowered to 20% and the new
required rate of return is 18%
rohitcrk1Beginner
economincs
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Is there some mistake with the data given in this question, because generally in gordon growth model question dividend distributed is less than earning, here dividend is 4 times of earnings.