Question
A company's common stock is expected to pay $2 in dividends annually over the next four years. At the end of the fourth year, its
A company's common stock is expected to pay $2 in dividends annually over the next four years. At the end of the fourth year, its stock is expected to be valued at $45. If the firm's cost of equity is 12%, what is its intrinsic value today? What should its stock sell for in 1 year?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To find the intrinsic value of the stock today we need to find the present value of all future divid...
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
