Food Chain, Inc. common stock recently paid a dividend of $2.60. The firm typically pays out 50% of its earnings as dividends and retains the rest for investment in the firm. Food Chain has a return on equity of 15 percent. If investors require a return of 12 percent, what is the intrinsic value of the firm's common stock? Assume dividends will grow at a constant rate. 

a) $21.67 

b) $62.11 

c) $57.78 

d) $23.29 

e) $24.92

Answer rating: 100% (QA)

To calculate the intrinsic value of Food Chain Incs common stock using the Gordon Growth Model ... View the full answer