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Sir i dont undersrand the calculation or part1 sir how they have calculated with dvm the growth ia given current share price is also given but there is not market value how to calcuate sir i didnt understand first working
I don’t understand your question.
For option 1, the current share price is not given in the question, and this is what you are asked to calculate.
They have used the dividend valuation formula from the formula sheet. However the formula gives the market value assuming the first dividend is in 1 years time. Here, the first dividend is in 3 years time (2 years late) and therefore the answer from the formula needs discounting for 2 year.
Have you watched my free lectures on the valuation of securities? I work through an example like this in the lecture.
The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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