Question

Kmax Ltd is paying a dividend of sh 12.00 per share currently. The dividend that the company can pay in the subsequent years is expected to decline at the rate of 4% every year in perpetuity. The capitalization rate of the company is 15%. Calculate the intrinsic value of the company’s ordinary share. 

Answer 1

Sh 12.00$/$ $($ 15 $\%$ $-$ 4$\%$ $)$

$=$12$/$0.11 $=$ ksh 109.09

Answer is 109.09ksh