Question: Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of

Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 12% during year 2, 20% during year 3, and 6% constant per year thereafter. The risk-free rate of return is 5%, and the expected return on the market portfolio is 17%. The stock of Todd Mountain Development Corporation has beta of .75. The intrinsic value of the stock is _____.

A) $44

B) $37.65

C) $35.30

D) $50 (it says this one is wrong)

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