Chief Medical Inc. is a little-known producer of heart pacemakers. The earnings and dividend growth prospects of
Question:
a. What is the intrinsic value of Chief stock according to Albert?
b. What is the intrinsic value of Chief stock according to John?
c. Assume that Chief stock now sells for $39| per share. If the stock is fairly priced at the present time, what is the implied perpetual dividend growth rate? What is the implied P/E (price-earnings ratio) on next year's earnings, based on this perpetual dividend growth assumption and assuming a 25% payout ratio?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Fundamentals of Investments
ISBN: 978-0132926171
3rd edition
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
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