The following information is collected for Hilarious Ltd, a listed company in Australia: Risk-free rate 6.20% Market Risk Premium 2.60% Beta of Share 1.7 Last Dividend paid $3.20 (assume dividend only paid annually by Hilarious) Forecast dividend growth rate 4.50% Current Price of ordinary share $52.00 Required: Value an ordinary share of Hilarious Ltd using the Gordon Constant Growth Dividend Model and decide if you would recommend a purchase of a batch of shares in this company at current price level. Note that market share price will be adjusted to its intrinsic value. As a result, the share will increase in value at the marketplace.

The following information is collected for Hilarious Ltd, a listed company in Australia: Risk-free rate 6.20% Market Risk Premium 2.60% Beta of Share 1.7 Last Dividend paid $3.20 (assume dividend only paid annually by Hilarious) Forecast dividend growth rate 4.50% Current Price of ordinary share $52.00 Required: Value an ordinary share of Hilarious Ltd using the Gordon Constant Growth Dividend Model and decide if you would recommend a purchase of a batch of shares in this company at current price level. Note that market share price will be adjusted to its intrinsic value. As a result, the share will increase in value at the marketplace.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 1FIC

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