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The risk-free rate of return is 7.5%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation
The risk-free rate of return is 7.5%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 2.8. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $25 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 16% per year on all reinvested earnings forever. Required: a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) es Intrinsic value $ 25.00
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