You are investing in a stock expected to pay a dividend of $3.5 (per share) in year 1, $3.7 in year 2, $3.9 in year 3, and $4.0 in year 4. The required rate of return on the stock is 9.5%. Analysts expect earnings per share (EPS) of $11 and a P/E ratio of 36 at the end of year 4. What is the intrinsic value of the stock?

Answer rating: 100% (QA)

To calculate the intrinsic value of the stock we can use the Dividend Discount Model D... View the full answer