Homework Answers
Stock Price =Dividend today*(1+growth)/(Required Rate-growth)
=2.25*(1+5%)/(14%-5%) =26.25
Since price of stock is 25 hence it is underpriced. Hence option c
is correct option
P/E of GM is same as ford =12
EPS of GM =4.75
Price of GM =12*4.75 =57 (Option c is correct option)
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