Ron really wants Tiffany to invest in his company - Bishop Companies. Ron's company plans to begin offering annual dividends of $.39 starting next year. Ron reminds Tiffany about taking Dr. Minor's finance course at LOC. His CFO expects their dividend to grow at 3.17% annually for the foreseeable future. Tiffany's credit union is offering long term CD rates of 5.9%. Currently, Ron's company's stock is trading at $3.75.

Calculate the intrinsic value of the Bishop Companies' stock. At the stock price you calculated, would the Bishop Companies' stock be a good stock for Tiffany to purchase? Why or why not? What is the market value if there are 1 million outstanding shares?

Answer rating: 100% (QA)

To calculate the intrinsic value of the Bishop Companies stock we can use the ... View the full answer