Portman Industries just paid a dividend of $2.40 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portmans dividend is expected to grow at a constant rate of 4.00% per year. Assuming that the market is in equilibrium, use the information just given to complete the table.

Term Value

Dividends one year from now (D)

Horizon value ( P1 )

Intrinsic value of Portmans stock

The risk-free rate ( rRF ) is 5.00%, the market risk premium ( RPM ) is 6.00%, and Portmans beta is 1.30.

What is the expected dividend yield for Portmans stock today?

8.45%

7.03%

8.79%

9.53%