Intrinsic Value of the Stock Assignment
February 18th, 2020
Interior Airline is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 10% per year. The risk-free rate of return is 4% and the expected return on the market portfolio is 13%. The stock of Interior Airline has a beta of 4.00. Using the constant growth DDM, the intrinsic value of the stock is _________.
1. | $10,000 | |
2. | $22.73 | |
3. | $27.78 | |
4. | $41.67 |
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