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Question 6 (8 points) Mohan Gupta is the portfolio manager of an India-based equity fund....

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Question 6 (8 points) Mohan Gupta is the portfolio manager of an India-based equity fund. He is analyzing the value of Tata chemical Ltd. (Bombay Stock Exchange: TATACHEM). Gupta has conclude that the DDM is appropriate to value Tata Chemicals. Gupta has decided to use a three-stage DDM with a linearly declining growth rate in stage 2. He consider Tata Chemicals to be a high growth company, and estimate stage 1 (the growth stage) to be 4 years and stage 2 (the transition stage) to be 12 years. He estimates the growth rate to 15% in stage 1 and 9% in stage 3. Gupta has estimated the required return on equity for Tata Chemicals to be 16%. In your written response, please start with question numbers such as a), b), or c) before showing your work and answer to the question. a) The most recent dividend per share for the company is Rs9.00. What are the expected dividend per share for the next four years (D.D2, D3, and D.)? (2 points) b) What is the terminal value of Tata Chemicals in year four (V.)? (4 points) c) Estimate the intrinsic value of the stock (Vo). (2 points)

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