ily Co. paid a dividend of $5.25 on its common stock this year. The company's dividends...
ily Co. paid a dividend of $5.25 on its common stock this year. The company's dividends are expected to grow at a constant rate of 8.5% indefinitely. If the required rate of return on this stock is 15.5%, compute the intrinsic value per share of Lily Co. stock. $56.23 $43.90 $75 $81.38
Homework Answers
Dividend = $5.25
Growth rate = 8.50%
Required return = 15.50%
Intrinsic value per share = [(Dividend *(1 + Growth rate)] / (Required return - Growth rate)
Intrinsic value per share = ($5.25 * 1.085) / (0.155 - 0.085)
Intrinsic value per share = $81.38
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