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A Ltd. stock is currently trading at Ghc 110 per share. You have forecasted that A. Ltd. Will pay dividends of Ghc2.5 in the first
A Ltd. stock is currently trading at Ghc 110 per share. You have forecasted that A. Ltd. Will pay dividends of Ghc2.5 in the first year, Ghc3 in the second year, and Ghc3.25 in the third year, You expect that at the end of the third year, the selling price of the companys stock will be Ghc125 per share. The estimated cost of capital is 5%. What is the intrinsic value of the A Ltds stock? Is the stock overvalued or undervalued? Is it worth investing in such a company?
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