Question
Hershey corporation has increased its annual dividend by about 4.5 percent in each of the last 20 years. in the firms current annual report, the
Hershey corporation has increased its annual dividend by about 4.5 percent in each of the last 20 years. in the firms current annual report, the president of Hershey states that the firm intends to continue with the policy of uninterrupted dividend growth at the same rate. the last dividend paid was 1.04 per share, then which of the following statements is true? (Based on a valuation by the Gordon growth model)?
a if you own shares in Hershey, then you should sell them b/c the current market price of 47.88 is greater than their intrestic value of 43.47
b you should buy Hershey shares b/c the intristic value of 50.03 is greater than the market price
c you should sell all shares you hold b/c the market is over valuing the shares by 6.28 per share
d you should buy them b/c the market is under valueing them by 6.28 per share
e you should buy shares b/c the intristic value of 51.03 is greater than the 47.88 market price
please Explain and show how you came up with the answer. thanks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started