Return on Equity (ROE) is Satva Limited is 15% and the capitalization rate applicable to the company is at 20%. Satva Limited's Book Value per share…

EPS = ROE x BVPS (WN 1) EPS = 0.15 x 125 = 18.75 Growth = ROE x Retention Ratio = 0.15 x 0.65 = 9.75% D1 = Do (1 + g) = (18.75 x 35%)(1 + 0.0975) = 7.20 Intrinsic Value of share today - Gordon's Formula Po = D1 / (Ke-g) = 7.20 / (0.20-0.0975) Po = 70.24 Intrinsic Value of share today - Walter's Model Po = D + (r/Ke)(E-D) / Ke Here D = Do assuming it would remain constant through infinity Po = 6.5625 + (0.15/0.20)(18.75-6.5625) / 0.20 Po = 78.51 WN 1 - Relationship between ROE-EPS-BVPS ROE = Earnings for Equity Shareholders / Equity shareholders funds If we divide the numerator and denominator with “No of equity shares" ROE = (Earnings for Equity Shareholders / No of equity shares) / (Equity shareholders funds / No of equity shares) Therefore, ROE = EPS / BVPS