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What is the stock's current intrinsic value?

What is the stock's current intrinsic value?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Value line has provided dividend projections for firm XYZ of $1.8 a share for the year 2024, and $2.7 per share for the year 2027. The current 10-year risk free rate is 5.2%, the market risk premium is 5.5%, and the stock's beta is 1.36. The stock's projected dividend payout ratio for the year 2027 is 60%, and its projected return on equity for the same year is 20 %. What is the stock's current intrinsic value?
Transcribed Image Text:Value line has provided dividend projections for firm XYZ of $1.8 a share for the year 2024, and $2.7 per share for the year 2027. The current 10-year risk free rate is 5.2%, the market risk premium is 5.5%, and the stock's beta is 1.36. The stock's projected dividend payout ratio for the year 2027 is 60%, and its projected return on equity for the same year is 20 %. What is the stock's current intrinsic value?
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