Mac Tools has paid out a per-share dividend of $4 on its common stock for the year just ended.Analysts expect that the company's earnings and dividends per share will grow at a rate of 12% for the coming 5 years, and then begin to grow at a constant rate of 3.5% for the foreseeable future after that.The company's stock has a beta of 1.50.The proxy for the risk-free rate stands at 2.5%, and the market risk premium is estimated to be 5%.What should each share of Saunders stock be trading for today?

Answer rating: 100% (QA)

To determine the intrinsic value of each share of Mac Tools stock we can use the dividend discount m... View the full answer