Question
The first stock pays a current dividend of $2 which is growing at 3% per year. The cost of equity is 9% and the WACC
The first stock pays a current dividend of $2 which is growing at 3% per year. The cost of equity is 9% and the WACC is 7%. Based on this info what should you do if the stock is trading at $29.50 a share?
a. Buy it as the intrinsic value of the stock is just over $34
b. Short or sell the stock as the intrinsic value of the stock is under $26 a share
c. Buy it as the intrinsic value is $33.33
d. Buy is as the intrinsic value is just over $51
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Management Science The Art Of Modeling With Spreadsheets
Authors: Stephen G. Powell, Kenneth R. Baker
4th Edition
978-1118517376, 9781118800348, 1118517377, 1118800346, 978-1118582695
