Equity Shares Valuation Illustration 9

MNO Ltd. share are quoted at  80 on BSE currently. The company pays Re.1 per share as dividend and the investors expects a growth rate of 5% per year.  Compute:

i)                    Expected rate of return

ii)                  If the required rate is 10% p.a., calculate the indicative market price

iii)                Advise on the basis of the indicative market price computed above whether it is profitable to invest in the shares of MNO Ltd. at its current price on BSE.