Long Answer (

1. On the Yahoo Finance website you collect the following data on Intel, Inc. Intel is currently trading at $26.52 per share, has a current dividend per share of D0=$2, a constant growth rate of g = 6%, and a market beta of 1.25. Suppose that the risk-free rate is Rf = 3% and the risk-premium is E(Rm)-Rf = 8%.

a. According to the Dividend Discount Model (DDM), what is the intrinsic stock price of Intel?

b. What is the return on equity (ROE) of Intel if its current earnings per share is E0 = $8?

c. Calculate the PVGO of the firm.

d. Do you think Intel is overvalued? Undervalued? Explain.