Following details are available to you for two companies, Beauty Ltd. and Pretty Ltd.: Beauty Ltd. Pretty Ltd. Internal rate of return (%) 15 10 Capitalisation rate (%) 15 10 Earnings per share (₹) 12 10 Cash dividend pe

Using Walter Model: P = [D + (r/k)(E-D)] / k Where P is price per share D is dividend per share E is earnings per share r is Internal rate of return k is capitalization rate Applying the above formula for two companies Beauty Ltd. P = [5 + (0.15/0.15)(12-5)] / 0.15 P = [5 + (1)(7)] / 0.15 P = [5 + 7] / 0.15 P = 12 / 0.15 P = ₹80 Pretty Ltd. P = [2 + (0.10/0.10)(10-2)] / 0.10 P = [2 + (1)(8)] / 0.10 P = [2 + 8] / 0.10 P = 10 / 0.10 P = ₹100