Question: Assume that ABC Corp. will pay P3 in dividends per share, while the selling price at the end of the holding period can reach P120

Assume that ABC Corp. will pay P3 in dividends per share, while the selling price at the end of the holding period can reach P120 per share. The estimated cost of equity capital is 5%. Currently, the stock of ABC Corp. trades at P118 per share.

a. What is the intrinsic value of ABC Corp stock?

b. What is the status of ABC Corp stock in the market?

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