1. Altex Pharma has recently launched a new product, which has caused its dividends to
grow rapidly at a rate of 1200 annually for the next 5 years. However, the company
anticipates that the market will stabilize after this period, and the growth rate will drop to
500 forever. The current dividend paid is Rs 15 per share. The required rate of return for
equity investors in Altex Pharma is 14%. In addition, Altex Pharma plans to reinvest 25%
of its earnings during the high-growth phase to fund future projects. What is the intrinsic
value of Altex Pharma's share?
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