Question: C Corp expects to earn $6 per share next year. The firms total assets/equity ratio is equal to 2, net profits/sales ratio is 0.015, and

C Corp expects to earn $6 per share next year. The firms total assets/equity ratio is equal to 2, net profits/sales ratio is 0.015, and sales/total assets ratio is equal to 5, and its plowback ratio is to be kept at 60%. The firms beta is 1.2, the expected market risk premium is 5%, and the risk-free rate is 2%.

1. Compute the intrinsic value of the stock assuming the stocks earnings and dividends will grow at a constant rate. 2. Compute the present value of the growth opportunities of the stock given the results from part 1

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