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Your broker has advised you to buy shares of Hungry Boy Fast Foods, which is expected to pay a dividend of $5 per year for
Your broker has advised you to buy shares of Hungry Boy Fast Foods, which is expected to pay a dividend of $5 per year for the next 4 years and will (according to the broker) continue to do so for many years. The broker believes that the stock will be worth $16 per share in 4 years.You have good reason to think that the discount rate for this firms stock is 8% per year, because that rate compensates the buyer for all pertinent risks. Then, the true financial value of the stock is $
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