1. Antique Arts Company would pay Rs. 2.50 as dividend per share for the next year

Question

and is expected to grow indefinitely at 12%. What would be the equity value if the investor require 20% return?

Answer 1

Equity Value =
Market capitalization
+ Amount that in-the-money stock options are in the money
+ Value of equity issued from in-the-money convertible securities
- Proceeds from the conversion of convertible securities

Answer 2

Equity Value =
Market capitalization
+ fair value of all stock options (in the money and out of the money), calculated using the Black-Scholes formula or a similar method
+ Value of convertible securities in excess of what the same securities would be valued without the conversion attribute

Answer 3

P=D/(R-g)

P=2.5/(0.2-0.12)=31.25