Proctor and Gamble's current annual dividend (D₀) is $3.65. The dividend is expected to grow by 2.5% per year. P&G's beta is 0.38, the current risk-free rate is 2% and the market risk premium is 8%. 

• What is the required return to the stock?
• What is the intrinsic value (current price) of P&G's stock?
• If Proctor and Gamble is currently trading for 148.72 is the stock under- or overvalued?

Answer rating: 100% (QA)

To calculate the required return and intrinsic value of Proctor and Gambles stock we will use the Di... View the full answer