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Question 1 Chief Medical, Inc. is a little - known producer of heart pacemakers. The earnings and dividend growth prospects of the company are disputed
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Chief Medical, Inc. is a littleknown producer of heart pacemakers. The earnings and dividend growth prospects of the company are disputed by analysts.
Albert Bender at Goldman Sachs is forecasting growth in dividends indefinitely. However, Mary Montgomery at Morgan Stanley is predicting a growth in dividends, but only for the next three years, after which the growth rate is expected to be forever.
The Chief Medical annual dividend per share was $ for the most recent months and was paid recently. Stocks with similar risks currently are priced to provide a rate of return.
a What is the intrinsic value of a share of the stock according to Albert?
b What is the intrinsic value of a share of the stock according to Mary?
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