Question: can you please help me Todd Mountain Development Corporation is expected to pay a dividend of $1.50 in the upcoming year. Dividends are expected to
Todd Mountain Development Corporation is expected to pay a dividend of $1.50 in the upcoming year. Dividends are expected to grow at the rate of 9% per year. The risk-free rate of return is 0.2% and the expected return on the market portfolio is 12%. The stock of Todd Mountain Development Corporation has a beta of 1.20. Using the constant growth DDM, the intrinsic value of the stock is _ (Hint: First apply CAPM to find the required rate of return for equity and then use it in the constant dividend growth model.) A) 27.74 B) 27.85 C) 27.99 D) 28.06 Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2.00, a dividend in year 2 of $3.00, and a dividend in year 3 of $4.00. After year 3 , dividends are expected to grow at the rate of 7% per ycar. An appropriate required return for the stock is 12%. Using the two-stage DDM, the stock should be worth! today. (Hint: Discount the dividends for the first three years individually and add the sum of their present values to present value of the dividends from year 4 on obtained through application of the constant dividend growth model.) A) 65.80 B) 66.13 C) 67.95 D) 68.60
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