Asian Paints paid out dividends of Rs. 300 milligh on net income bf Rs. 900 millia in the recent financial year; reventes were Rs. 1500 million for the year. During the same year, if working capital was 5% of revenues. The firm had no cash in hatid at the time of the valuation. Asian Paints maintains a stable debt ratio of 0.6 and beta of 1.5 throughout. The risk-free rate is 4% and market returm is 6.5%. It is assimed that the firm is of average risk and cost of equity will hold forever. Business analysts expect the firm to grow at 10% a year for the next 5 years and their estimate is constant for all of the parameters including revenues, net income, dividends, capital expenditures and depreciation. Additionally, assume that the &on-cash working capital will remain at its existing proportion of revenues. After 5 years, firm will be in stable growth stage, growing 5% a year and maintaining return on equity of 15% forever.
( *** Hint: Reinvestment rate used for FCFE model is same as retention ratio for DDM) Based on the information given above, answer the following:
What is the present value of expected revenue at the end of 4ℎ year?