The following data pertain to the value of underlying factors of A Ltd.’s shares.
Value of Underlying Factors
|
Original |
Revised |
|
| Risk-free rate
Market risk premium Beta Expected growth rate Previous dividend |
10% 5% 1.2 6% 2 |
8% 6% 1.5 8% 2 |
(a) What is the intrinsic value of A Ltd.’s share based on the original set of values?
(b) What will it be under the revised set of values?
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