The following information pertains to M/s Kanagana Limited : Earnings of the company ₹5 lakh Dividend payout ratio 60% No. of shares outstanding 1,00,000 Equity capitalisation rate 12% Rate of return on investment 15% Wh

As per Walter's model P = D + r / k (E - D) / k Where P = Market price per share; D = Dividend per share; E = earnings per share; r = rate of return on investment; k = cost of equity capital Earnings per share (E) = ₹5,00,000 / 1,00,000 = ₹5 Dividend per share (D) = 60% of ₹5 = ₹3 r = 15% or 0.15 k = 12% or 0.12 P = 3 + 0.15 / 0.12 (5 - 3) / 0.12 P = 3 + 1.25(2) / 0.12 P = 3 + 2.5 / 0.12 P = 5.5 / 0.12 P = 45.83 Therefore market value per share as per Walter's model is ₹45.83