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Jamie just purchased 100 shares of stock in ABC Company for $10 per share on October 1, 2018. The last dividend paid out by the
Jamie just purchased 100 shares of stock in ABC Company for $10 per share on October 1, 2018. The last dividend paid out by the company was for S1 per share on June 30, 2018. The board recently declared another dividend of $1.04 per share to be paid out on December 31, 2018. Assume that Jamie's required rate of return on the shares is 6%. 1. Briefly discuss the difference between market value and intrinsic value. (10 pts.) 2. Calculate the growth rate of the stock. (10 pts.) 3. Calculate the intrinsic value of the stock right after Jamie purchased . (20 pts.)
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