In case, cost of capital is 10%, EPS Rs. 10, IRR 8% and retention ratio is 60%, then the value of equity share as per Gordon's Model will be

Answer: Option D

Gordon’s Dividend Capitalization Model is used to calculate the value of an equity share using the formula:

P = E(1 – b) / (k – br)

Where:

P = Price of the share (Value of equity share)

E = Earnings per share = Rs. 10

b = Retention ratio = 60% = 0.6

k = Cost of capital = 10% = 0.10

r = Internal rate of return = 8% = 0.08

Substitute the values into the formula:

P = 10(1 – 0.6) / (0.10 – 0.6 × 0.08)

P = 10(0.4) / (0.10 – 0.048)

P = 4 / 0.052

P ≈ Rs. 76.92 ≈ Rs. 77 (rounded)

Therefore, the correct value of the equity share as per Gordon's Model is Rs. 77.