QUESTION 43 A stock is selling for $50 in the market. The companys beta is 1.2, the market risk premium (rM - rF) is 5%, and the risk-free rate is 6%. The most recent dividend paid is D0 = $2.0 and dividends are expected to grow at a constant rate g. Whats the required rate of return by common shareholders?

5.0%

6.0%

11.0%

12.0%

A firms free cash flow in Year 1 is $2.5 million. If the expected long-run free cash flow growth rate for this company is 5%, the weighted average cost of capital is 11%. The company has $5 million in short-term investments and $3 million in debt, and 2 million shares outstanding, what is the estimated intrinsic stock price?

$16.83

$18.57

$25.33

$28.59