Friends, please solve this question which was asked in Nov 11 Exam of SFM :
Q1 (c) A co. has a book value per share of Rs 137.80.Its return on equity is 15% and follows a policy of retaining 60% of its annual earnings. If the opportunity cost of capital is 18%, what is the price of its share?[adopt the perpetual growth model to arrive at your solution].
According to me the answer should be Rs 91.867, but I am not sure. If I am wrong then please provide me the solution.
CAclubindia
