Re: [discussion_vu] i need assignment solution of fin 630 b part please its urgent matter please do the needful.

a):  

 

Dividend discount Model:

 

Alpha Corporation:

 

                  P₀ = D₀ (1+ g) / (R-g)

                       = 5 (1+0.03) / (0.12 - 0.03)

                       = 5 (1.03) / 0.09

                       = 5.15 / 0.09

                       = 57.2

 

 

Heller Corporation:

                 

                  P₀ = D₀ (1+ g) / (R- g)

                       = 4 (1+ 0.05) / (0.12 – 0.05)

                       = 4 (1.05) / 0.07

                       = 60

 

 

b):  

 

·        Alpha Corporation's stock: 60 - 57.2 = 2.8.        It is overvalued.

·        Heller Corporation's stock: 58- 60 = 2.               It is undervalued.

On Fri, Apr 22, 2011 at 7:05 PM, mc070400183 NIGAH NIZAR <mc070400183@vu.edu.pk> wrote:

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With best Regds

*Nigah-e-Nazar Fatimi*
    0092-332-2332082
    0092-305-2290080

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