Given below are the expected dividends of Kwik Inc. for the next five years. After year five, the dividends are expected to grow at a constant rate of 3% per year forever. Investors require a return of 9% on this stock. The current market price of one share is $36.35

Expected Dividend:

Year 01: $1.50

Year 02: $2.00

Year 03: $2.45

Year 04: 2.80

Year 05: $3.00

a) Which year is the "terminal date" for Kwik Inc.? b) How much is the terminal value? c) What is the intrinsic value of a share today? d) Is the stock overvalued or undervalued?

Answer rating: 100% (QA)

Kwik Inc Stock Valuation a Terminal Date The terminal date for Kwik Inc is year 5 This is because th... View the full answer