Among all the intrinsic valuation methods, which of the following would you rather consider in doing stock trading? Explain why. 

2. Alpbatross Company is expected to pay a P50/share common stock dividend at the end of the year. The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock is 15%. 

 

• What is the intrinsic value of the common stock today? 
• Assume that the current price of the stock in stock exchange is P600. Is the stock worth buying for? Explain.
• Assume you currently owned the said stock, and in the stock exchange, the current selling price of the stock is averaging at P600. Will you sell the stock now? Explain. 

Answer rating: 100% (QA)

The intrinsic value of a stock represents its true underlying value based on its expected future cas... View the full answer