You are investing in a stock that is expected to pay a dividend per share of $3.5 in year 1, $3.7 in year 2, $3.9 in year 3, and $4.0 in year 4. The required rate of return on the stock is 9.5%. Analysts expect earnings per share (EPS) of $13 and a P/E ratio of 36 at the end of year 4. What is the intrinsic value of the stock?

You are investing in a stock that is expected to pay a dividend per share of $3.5 in year 1, $3.7 in year 2, $3.9 in year 3, and $4.0 in year 4. The required rate of return on the stock is 9.5%. Analysts expect earnings per share (EPS) of $13 and a P/E ratio of 36 at the end of year 4. What is the intrinsic value of the stock?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 1P

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