Question
a. IBX's stock dividend at the end of this year is expected to be $2.15, and it is expected to grow at 11.2% per
a. IBX's stock dividend at the end of this year is expected to be $2.15, and it is expected to grow at 11.2% per year forever. If the required rate of return on IBX stock is 15.2% per year, what is its intrinsic value? b. If IBX's current market price is equal to this intrinsic value, what is next year's expected price? c. If an investor were to buy IBX stock now and sell it after receiving the $2.15 dividend a year from now, what is the expected capital gain (i.e., price appreciation) in percentage terms? What is the dividend yield, and what would be the holding-period return?
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
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