Solution to Assignment of FIN 622

Question # 02:

Star Industries has not been growing since past 20 years because of certain legal
Hazards. It earns Rs. 15 per share per year and pays it all out to stockholders. The
Stockholders have alternative, equivalent‐risk ventures yielding 20 percent per
Year on average. What is the worth of one share of Star Industries? Assume the
Company can keep going indefinites

Solution:

ESP( earning per share)=15 per share
Annual Rate of interest =r 20%= per year

Formula
Po = DIV/r
Putting the values in formula above

Po = 15/0.2
Po = 75