Question
Value Line is an investment research firm that provides estimates of the fundamental value of various companies' stocks.Suppose that Value Line projects that Valorous Corporation
Value Line is an investment research firm that provides estimates of the fundamental value of various companies' stocks.Suppose that Value Line projects that Valorous Corporation will pay a dividend of $1.80 per share at the end of this year and a dividend of $2.40 per share at the end of the following year.Value Line also projects that the price of Valorous' stock will be $44 per share after two years.If Valorous has an equity cost of capital of 8%, what is Value Line's estimate of the current fundamental value of one share of Valorous stock?
$42.40
$39.27
$40.22
$41.45
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