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1. Antique Arts Company would pay Rs. 2.50 as dividend per share for the next year
and is expected to grow indefinitely at 12%. What would be the equity value if the investor require 20% return?

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  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

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  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

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  3. P=D/(R-g)

    P=2.5/(0.2-0.12)=31.25

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