Question 3 (8 points) Mohan Gupta is the portfolio manager of an India-based equity fund. He is analyzing the value of T

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Question 3 8 Points Mohan Gupta Is The Portfolio Manager Of An India Based Equity Fund He Is Analyzing The Value Of T 1 (87.72 KiB) Viewed 56 times

Question 3 (8 points) Mohan Gupta is the portfolio manager of an India-based equity fund. He is analyzing the value of Tata chemical Ltd. (Bombay Stock Exchange: TATACHEM). Gupta has conclude that the DDM is appropriate to value Tata Chemicals. Gupta has decided to use a three-stage DDM with a linearly declining growth rate in stage 2. He consider Tata Chemicals to be a high growth company, and estimate stage I (the growth stage) to be 4 years and stage 2 (the transition stage) to be 12 years. He estimates the growth rate to 15% in stage 1 and 9% in stage 3. Gupta has estimated the required return on equity for Tata Chemicals to be 16%, In your written response, please start with question numbers such as a), b), or c) before showing your work and answer to the question. a) The most recent dividend per share for the company is Rs. 9.00. What are the expected dividend per share for the next four years (D₁, D2, D3, and D4)? (2 points) b) What is the terminal value of Tata Chemicals in year four (V)? (4 points) c) Estimate the intrinsic value of the stock (V₁) (2 points)