Question
Miltmar Corporation will pay a year-end dividend of $4, and dividends thereafter are expected to grow at the constant rate of 6% per year. The
| Miltmar Corporation will pay a year-end dividend of $4, and dividends thereafter are expected to grow at the constant rate of 6% per year. The risk-free rate is 6%, and the expected return on the market portfolio is 12%. The stock has a beta of 0.86. |
| a. | Calculate the market capitalization rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Market capitalization rate | % |
| b. | What is the intrinsic value of the stock? |
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Capital Market Finance
Authors: Patrice Poncet, Roland Portait, Igor Toder
1st Edition
3030845982, 978-3030845988
