Question: Good Evening! Can you explain how to solve for this question? Chesapeake Energy Corporation (CHK) is expected to pay a dividend of $1.2 next year.

Good Evening!

Can you explain how to solve for this question?

Chesapeake Energy Corporation (CHK) is expected to pay a dividend of $1.2 next year. Dividends are expected to grow at the rate of 2.3% per year forever. The risk-free rate of return is 3.5%, and the expected return on the market portfolio is 16%. The stock of CHK has a beta of 1.16. What would be the intrinsic value of the stock?

1) 7.64

2) 6.21

3) 7.82

4) 6.07

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