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You are supposed to analyze the price of Macy s ( ticker: M ) stock TODAY: ValueLine.com projects that next year s annual dividend for
You are supposed to analyze the price of Macys ticker: M stock TODAY:
ValueLine.com projects that next years annual dividend for M D will be $ For the next years, the dividends are expected to grow at the rate of per year based on projections in ValueLine Assume that the dividend in year is expected to grow from D at the rate of and all the subsequent dividends until year will grow at Assume that the dividend in year is expected to grow from D at the rate of and all the subsequent dividends will grow by as well, forever.
Required rate of return: assume that the riskfree rate is equal to per year forever and that the market risk premium from will stay constant forever as well. Assume the measure of economywide risk exposure M is associated with today will stay constant forever as well.
Based on the above information, do you conclude that M stocks are overvalued and thus people should sell them before the price drops or undervalued and thus people should quickly start buying M stocks Explain why based on numbers and sentences
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