Question: Variable Value Explanation Dividend growth estimate 5%, 3% 5% for 2 years (annual estimate) and 3% per year indefinitely thereafter. Current dividend $1.00 Dividend paid

Variable

Value

Explanation

Dividend growth estimate

5%, 3%

5% for 2 years (annual estimate) and 3% per year indefinitely thereafter.

Current dividend

$1.00

Dividend paid to the current owner on record

Beta coefficient

2.0

Current estimate

Expected market return

12.0%

Historical arithmetic average (annual) return on the S&P 500 Index

RFR

5.0%

10-year Treasury bond yield

(10 pts) Using the table above, what is the maximum that an investor should be willing to pay for the share of common stock today (intrinsic value)?

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