Question: Use a constant growth dividend discount model and consider the following. ABC stock is expected to have earnings of $8/share next year. The expected return

Use a constant growth dividend discount model and consider the following. ABC stock is expected to have earnings of $8/share next year. The expected return on the market is 12% and the one-year T-bill rate is 1%. The stock has a beta of 0.9. If the firm has an ROE of 7% and a plowback ratio of .5, what is the intrinsic value of the stock?

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