Sarasota Co. Ltd. is an unlisted company with ownership concentrated in relatively few hands. It has experienced steady growth and forecasts dividend paid out to its 75,000 shareholders to grow by 5% per year from the base of $558,000 this year. If the company's cost of capital is 9%, what is the value of a Sarasota share?

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The value of a share is the present value of all future dividends. Using the constant growth model, the value of a share is:Value of a share = Dividend per share / (Cost of capital - Dividend growth rate)= $558,000 / (0.09 - 0.05)= $195.30