You have been asked by your employers to demonstrate your knowledge in business valuation process, by analyzing the value of Best Capital Micro Finance (BCMF). The company paid a dividend of GH¢...

You have been asked by your employers to demonstrate your knowledge in business valuation process, by analyzing the value of Best Capital Micro Finance (BCMF). The company paid a dividend of GH¢ 250,000 this year. The current return to shareholders of companies in the same industry as BCMF is 12%, although it is expected that an additional risk premium of 2% will be applicable to BCMF, being a smaller and unquoted company.

Required: Compute the expected valuation of BCMF, if:

1. The current level of dividend is expected to continue into the foreseeable future

2. The dividend is expected to grow at a rate 4% par into foreseeable future

3.The dividend is expected to grow at a 3% rate for three years and 2% afterwards