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Asap! Banyan Tree has just paid a dividend of $2 per share (.e., DO $2). These dividends are expected to grow at constant rate of
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Banyan Tree has just paid a dividend of $2 per share (.e., DO $2). These dividends are expected to grow at constant rate of 6% in perpetuity a. What is the intrinsic value of the stock today given a required rate of return of 10%? (5 marks) b. What is the expected market price of the stock, one year from now? (5 marks) c. What is your expected rate of return if you are able to buy Banyan Tree stock at a price equal to its intrinsic value? Show that this expected return is the sum of the dividend yield and capital gain. (5 marks) d. If Banyan Tree is currently selling for $54.00, what growth rate in dividends must the market be expecting Step by Step Solution
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