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      Question

      What is the current value of the share of company, if

      the share is to be sold at Rs. 600 after two years and the expected dividend is Rs.10 and Rs.20 respectively at the end of year 1 and year 2. The expected return from the share is 20%.
      A Rs.600 Correct Answer Incorrect Answer
      B Rs.525 Correct Answer Incorrect Answer
      C Rs.521 Correct Answer Incorrect Answer
      D Rs.439 Correct Answer Incorrect Answer
      E Cannot be determined Correct Answer Incorrect Answer

      Solution

      Current value of the share = 10/(1.2) + (20+600) / (1.2)2 = 438.88 or ~ 439

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