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Question 2 Given the following data of ABC Inc. Dividend just paid (Do) - $5 Dividend payout ratio (d) - 60% Return on Equity (ROE)

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Question 2 Given the following data of ABC Inc. Dividend just paid (Do) - $5 Dividend payout ratio (d) - 60% Return on Equity (ROE) - 10% Required rate of return (K) = 15% 1. Calculate the intrinsic value of ABC stock. [4 points] II. If ABC stock is trading at $40 in the market, is it overvalued or undervalued? Will you buy or sell it? [1 point)

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