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Please tell me how to do problem 5, and please give me the correct answer, thank you so much (10 points) As the Finance Manager
Please tell me how to do problem 5, and please give me the correct answer, thank you so much
(10 points) As the Finance Manager of a firm you are looking at an investment for some of the firm's excess capital in the Adirondack Beltran Company (ABC) which sells for $52.50 per share and pays an annual dividend of $2.85. Dividends are expected to increase at 4.73% annually. The current risk-free rate is 3.96% and the market index is returning 10.17%. The beta of Adirondack is 1.82. The questions are as follows: 5. 1. What should the investor's required rate of return be in order to buy ABC? 2. What is the intrinsic value of ABC stock? 3. What is the expected rate of return on ABC stock? 4. Does the expected rate of return for ABC beat the market index return? Does the expected rate of return for ABC meet the investor's required rate of return? 5Step by Step Solution
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