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?

To calculate the equity value, we need to use the Gordon Growth Model, also known as the Dividend Discount Model (DDM).

The formula for the Gordon Growth Model is:

Equity Value = Dividend per Share / (Required Rate of Return - Growth Rate)

In this case, the Dividend per Share is Rs. 2.50, the Required Rate of Return is 20% (0.20), and the Growth Rate is 12% (0.12).

Substituting the values into the formula, we get:

Equity Value = 2.50 / (0.20 - 0.12)

Equity Value = 2.50 / 0.08

Equity Value = 31.25

Therefore, the equity value of Antique Arts Company would be Rs. 31.25 if the investor requires a 20% return.