1. 1.  Investors require a 12 percent per year return on the stock of M Company. Yesterday M Company paid a $2 dividend (dividends are paid annually). The dividend is expected to grow 20 percent per year for the next 2 years and at 8 percent per year thereafter. At what price should the stock sell? 

1. 2. A company has just paid its annual dividend at K3 per share. The dividend is expected to grow at a constant rate of 8% indefinitely. The beta of the stock is 1.25, the risk-free rate is 6% and the market premium is 8%. What is the intrinsic value of the stock?

Answer rating: 100% (QA)

11 To calculate the price at which the stock of M Company should sell we can use the dividend discou... View the full answer