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ASAPpleasethank you Gordon's Distillery has just paid a dividend of 4.16 per share of common stock. Its required rate of return is 12.5%. It is
ASAPpleasethank you
Gordon's Distillery has just paid a dividend of 4.16 per share of common stock. Its required rate of return is 12.5%. It is expected to grow indefinitely by 3.5% per annum. Gordon's common stock is currently trading at $48.25 a) What is the intrinsic value of Gordon's common stock? Show your workings. (4 marks) b) Is Gordon's common stock currently undervalued or overvalued (2 marks)? Would you buy it? (1 mark) c) News arrives that suggests that Gordon's Distillery will increase its dividend due to lower growth opportunities. Which variable(s) of the dividend discount model is (are) affected? (1 mark) How do you expect the share price to change? ( 2 marks) Step by Step Solution
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