Hilarious Ltd, a listed company in Australia: Risk-free rate 2.2% Market Risk Premium 6.5% Beta of Share 1.6 Last Dividend paid $2.00 (assume dividend only paid annually by Hilarious) Forecast dividend growth rate 4.5% Current Price of ordinary share $27.45 Required: Value an ordinary share of Hilarious Ltd using the Gord

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
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The following information is collected for Hilarious Ltd, a listed company in

Australia:

Risk-free rate 2.2%

Market Risk Premium 6.5%

Beta of Share 1.6

Last Dividend paid $2.00 (assume dividend only paid annually by Hilarious)

Forecast dividend growth rate 4.5%

Current Price of ordinary share $27.45

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.

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