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Stock Valuation Please answer the following stock valuation questions. If it’s helpful to do so, try charting out the answers

Stock Valuation

Please answer the following stock valuation questions. If it’s helpful to do so, try charting out the answers where applicable.

1. Calculate the stock’s intrinsic value according to the information below:

a. Stockholder’s required rate of return is 8.0%

b. The rate of growth in earnings and dividends in the first 2 years is 25%, the rate of growth in the next 2 years is 30%, and then 4% thereafter.

c. The last dividend paid by the company was $0.95

2. Calculate the stock’s intrinsic value according to the information below. If the current market price for the stock is $60.00, might you recommend buying shares of the stock based on the intrinsic value you calculated?

a. Stockholder’s required rate of return is 7.5%

b. The rate of growth in earnings and dividends in the first 4 years is 18%, the rate of growth in the next 2 years is 10%, and then 5% thereafter.

c. The last dividend paid by the company was $1.30

3. Calculate the stock’s intrinsic value according to the information below:

a. Stockholder’s required rate of return is 8.0%

b. The rate of growth is expected to be 3% every year

c. The last dividend paid by the company was $1.25

4. Calculate the stock’s intrinsic value according to the information below. If the current market price for the stock is $9.50, might you recommend buying shares of the stock based on the intrinsic value you calculated?

a. Stockholder’s required rate of return is 11%

b. The rate of growth is expected to be 5% every year

c. The last dividend paid by the company was $0.85

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