
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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answer must be in proper format or i will give down vote

Transcribed Image Text:You've collected the following information from your favorite financial website.
52-Week Price
Hi
Lo
Stock (Dividend)
Dividend
Yield %
PE
Close
Ratio
Price
Net Change
77.40
10.43
Acevedo .36
2.6
6
13.90
-.24
55.81
33.42
Georgette, Incorporated 1.54
3.8
10
40.43
-.01
130.95
69.60
YBM 2.10
2.4
10
88.99
3.07
50.24
35.00
13.95
Manta Energy .80
5.2
6
15.43
-.26
20.74
Winter Sports .32
1.5
28
??
.18
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20.5 percent. Suppose YBM
meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.5 percent, indefinitely. Assume
investors require a return of 13 percent on YBM stock. According to the dividend growth model, what should the stock price be today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Current stock price
Based on these assumptions, is the stock currently overvalued, undervalued, or correctly valued?
Stock currently
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