In-class Exercise 9 1. The value of Internet companies is based primarily on A. current profits B. Tobin's a C. growth opportunities D. replacement cost 2. A stock has an intrinsic value of $15 and an actual stock price of $13.50. You know that this stock A. has a Tobin's q value 1 3. Westsyde Tool Company is expected to pay a dividend of $1.50 in the upcoming year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 14%. Analysts expect the price of Westsyde Tool Company shares to be $29 a year from now. The beta of Westsyde Tool Company's stock is 1.2. Using the CAPM, an appropriate required return on Westsyde Tool Company's stock is A. 8.00% B. 10.80% C. 15.60% D. 16.85% 4. Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 8% per year. The risk-free rate of retum is 5%, and the expected return on the market portfolio is 17%. The stock of Todd Mountain Development Corporation has a beta of 0.75. Using the constant-growth DDM, the intrinsic value of the stock is A. $4.35 B. $17.65 C. $37.50 D. $50.00