Fundamentals Of Two Stocks And Suggest Appropriate Action Calculation of Intrinsic Value of XYZ Ltd: Current Dividend=0.

8,growth rate=18% for three years and 8% there after, r=15.6(CAPM). Intrinsic value is Rs.14.59(MP=Rs. 23)

Calculation of Intrinsic Value of ABC Ltd:Current dividend=3, g1=24.57%(CMPD), g2=10% r=18(CAPM) Intrinsic value is Rs.86.095(MP=Rs.80)

APPROPRIATE ACTION OF BOTH THE STOCKS

ABC Ltds Intrinsic value is Rs.86.095 and its Market value is Rs.80, so it is an Undervalued stock. XYZ Ltds Intrinsic value is Rs.14.591 and its Market value is Rs.23, so it is an Overvalued stock. Therefore ,we will buy ABC Ltd stock because it is an undervalued stock, we will get more profit in this stock