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A stock pays semiannual dividends. In the first 3 years, it expects to pay dividend of $1 per share every 6 months, after which the
A stock pays semiannual dividends. In the first 3 years, it expects to pay dividend of $1 per share every 6 months, after which the dividend per share is expected to grow at 2% every 6 months, perpetually. The beta of the stock is 1.2, risk-free rate is 3%, and the market return is 10%. Based on the forecast dividends, what is the estimated intrinsic value of this stock today?
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