1. What is your estimate of the intrinsic value of company ZZZ's common stock today using a 1-year investment horizon? You expect ZZZ to pay a $1.10 dividend at the end of next year and you expect ZZZ to sell for $125.50 at the end of next year. You estimate ZZZ's required rate of return to be 8.4%.

A. Intrinsic Value Today =

B. If ZZZ's common stock is currently selling for $120 today, would you consider it a good investment based on the information given? (Yes or No)

2. You estimate that Company A will have dividends of $2.00 next year, $2.50 per share in year two and $3.00 per share in three years. After year three, starting at the beginning of year 4, the dividend is expected to grow at a constant rate of 4%. The required rate of return is 8.2%.

A. What is your estimate for Company A's stock price at the beginning of year 4?

Horizon Value=