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5. Prudent Financial is currently paying $1 per share in dividends which are expected to grow at 5% per year in perpetuity. Prudent Financial's beta
5. Prudent Financial is currently paying $1 per share in dividends which are expected to grow at 5% per year in perpetuity. Prudent Financial's beta is currently equal to 0.75 and their debt-to-equity ratio is currently equal to 1 . The marginal corporate income tax rate is equal to 50%. The long-term risk free rate is currently equal to 5% and the expected stock market risk premium is also 5%. If Prudent Financial decide to reduce their debt-to-equity ratio to 0.8 , then the intrinsic value per share of stock in the company will be equal to: (a) $26.13. (b) $28.00. (c) $30.00. (d) $35.00
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