The dividend growth rate per share for the next 10 years is expected to be 4.5%. The current dividend is 3 euros. The expected price of the share at the end of the 15th year is 85 euros and the required return on the share is 9.5%. 

1) Calculate the intrinsic value of the stock today; 

2) If the price of the share is 75 euros, how would you characterize the share. What would you advise your clients if you were a financial analyst? 

3) Calculate the capital and dividend yield of the stock?

4) What is the intrinsic value of a share equal to? How does it differ from that of bonds?

Answer rating: 100% (QA)

Lets break down your questions step by step 1 To calculate the intrinsic value of the stock today using the Dividend Discount Model DDM you can use th... View the full answer