Question: Problem 1: Using a dividend discount model, what is the intrinsic value of a stock that is expected to pay a dividend of $4.35 forever.

Problem 1: Using a dividend discount model, what is the intrinsic value of a stock that is expected to pay a dividend of $4.35 forever. Use a discount rate of 15%. Problem 2: Using a dividend discount model, what is the intrinsic value of a stock that just paid a dividend (Do) of $2.10, has a constant dividend growth rate of 6%. Use a discount rate of 17%. Problem 3: Based on the Gordon Growth Model, what is the intrinsic value of a stock that is expected to pay a dividend of $4.00 per share at the end of year 1. Assume that the dividend will grow at 3% forever. The beta of the stock is 12, the risk-free rate of return is 3.5% and the market risk premium is 6% (hint: you have to use CAPM to find g) Problem 4: Based on the Gordon Growth Model, when a stock has a price of $31.25, is expected to pay a dividend at t-1 of $5.00, and has a dividend growth rate of 5%, what is the required rate (rs) of the stock? Problem 5: Using the Gordon Growth Model, what is the constant dividend growth rate (g) of the following stock: The stock is priced at $30.00; the dividend one year from now is $6.00; the required rate of return of the stock is 24%. Problem 6: Using a dividend discount model, what is the intrinsic price of a stock that pays the following dividends during the first stage: D1 $1.00, D2 $1.50, D3 $2.00. In the second stage (which begins at t-3) the company is expected to grow at 4% for the rest of its life. Use a required rate of return of 12%
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