A stock just paid an annual dividend of $7.8. The dividend is expected to gro 2% per year for the next 4 years. In 4 years, the P/E ratio is expected to be the payout ratio to be 60%. The required rate of return is 8%. Part 1 What is the intrinsic value of the stock?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A stock just paid an annual dividend of $7.8. The dividend is expected to grow by
2% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 15 and
the payout ratio to be 60%.
The required rate of return is 8%.
Part 1
What is the intrinsic value of the stock?
0+ decimals
Transcribed Image Text:Intro A stock just paid an annual dividend of $7.8. The dividend is expected to grow by 2% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 15 and the payout ratio to be 60%. The required rate of return is 8%. Part 1 What is the intrinsic value of the stock? 0+ decimals
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