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Refer to Step 8 of the Stock Portfolio Assignment Stock Valuation: Assume each company stock has an expected (constant) dividend growth rate of 1.35% and
Refer to Step 8 of the Stock Portfolio Assignment Stock Valuation: Assume each company stock has an expected (constant) dividend growth rate of 1.35% and a required rate of return of 10.7%. (a) Calculate the intrinsic value of each company stock you purchased. (b) Determine whether the price you paid for the stock was just right, overvalued or undervalued - Intrinsic value in this method means the value of the stock is based solely on the expected rate of growth of the dividend the company pays. Note: If the price you paid was more than the value you calculated the stock was overvalued. If the price you paid was equal to the value you calculated the price was just right. If the price you paid was less than the value you calculated the stock was undervalued. Formula: P=D0(1+g)/(Rg); where
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