The correct answer is B. Rs. 87.
Gordon’s model is a dividend discount model that is used to estimate the value of a share of stock. The model assumes that the company will pay a constant dividend forever, and that the dividend will grow at a constant rate. The value of the share is then equal to the present value of the future dividends.
The formula for Gordon’s model is:
$P_0 = \frac{D_1}{r – g}$
where:
- $P_0$ is the current price of the share
- $D_1$ is the dividend per share in the next year
- $r$ is the discount rate
- $g$ is the growth rate of the dividend
In this case, we are given the following information:
- $D_1 = Rs. 10$
- $r = 10\%$
- $g = 8\%$
Substituting these values into the formula, we get:
$P_0 = \frac{D_1}{r – g} = \frac{Rs. 10}{10\% – 8\%} = Rs. 87$
Therefore, the value of the equity share as per Gordon’s Model is Rs. 87.
Option A is incorrect because it is the value of the share if the dividend is not growing. Option C is incorrect because it is the value of the share if the discount rate is 8%. Option D is incorrect because it is the value of the share if the growth rate is 10%.