The price of Jane's Book Co. is now $85. The company pays no dividends. Ms. Johnson expects the price four years from now to be $120 per share. Should she buy Jane's Book Co. stock if she desires a rate of return of 9%? Explain. (Hint: Evaluate this situation using justified price (intrinsic value). In this case ignore dividends.)



1) The justified price (or intrinsic value) of the stock is?

Answer rating: 100% (QA)

To calculate the justified price or intrinsic value of the stock we can use the formula for the pres... View the full answer