Question
18) Redhat Corporation is expected to pay a dividend of $1 in the upcoming year. Dividends are expected to grow at the rate of 5%
18) Redhat Corporation is expected to pay a dividend of $1 in the upcoming year. Dividends are expected to grow at the rate of 5% per year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 13%. The stock of Redhat Corporation has a beta of 1.1. What is the intrinsic value of Redhat's stock?
a.7.52
b.11.24
c.11.80
d.8.36
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077647094
