Afteryear5,weassumethatthebetawilldeclinetoward 1 in
stablegrowth(whichwilloccurafterthe10thyear)andthat
theriskpremiumforIndiawillalsodropto5.5%(reflecting
our assumptions that India will become a more stable
economy).
Weassumethatcompetitionwillpickupafteryear5,pushing
thereturnonequitydowntothestable-periodcostofequity
of11.5%bythe10thyear.Thepayoutratioinstablegrowth
can then be estimated using the stable growth rate of 4%:
The following table summarizes the assumptions about
payoutratiosandexpectedgrowthratesandalsoshowsthe
estimatedearningsanddividendspershareeachyearforthe
next 10 years:
Duringthetransitionphase,alloftheinputschangeinequal
annual installments from the high-growth period valuesto