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4M is a manufacturer of dirt bikes. It start to pay dividend in recent years in order to boost the attractiveness of its stock. The
4M is a manufacturer of dirt bikes. It start to pay dividend in recent years in order to boost the attractiveness of its stock. The dividend will be $0.50 per share next year. After that dividends will increase by 5 percent per year. The required return on the stock based its beta risk is 12%. Suppose the current stock price is $8.21 per share. Estimate the intrinsic value of the stock and recommend investors whether they should buy the stock.
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