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    Accounting: Valuation of Company

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    You are considering investing in ATP Limited ("ATP") which is listed on Singapore Exchange. Financial information on ATP, which is shortly to pay its annual dividend, is as follows:

    See attached for tables.

    Calculate the value of ATP using (i) price/earnings ratio method and (ii) dividend growth model, and discuss the significance of the values you have calculated in comparison to the current market value of ATP. When applying the dividend growth model, you should assume that the dividends will continue to grow at the same rate perpetually.

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    Solution Summary

    The problem set deals with the valuation of a company with dividend growth model and price-earnings ratio method.