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Appropriate market capitalization rate

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Reference no: EM132932872

The Duo Growth Company just paid a dividend of $4.6 per share. The dividend is expected to grow at a rate of 19% per year for the next 3 years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 12% per year.

a.What is your estimate of the intrinsic value of a share of the stock? (Omit the "tiny_mce_markerquot; sign in your response. Round your answer to 2 decimal places.)
Intrinsic value per share$

b.If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Omit the "%" sign in your response. Round your answer to 1 decimal place.)
Expected dividend yield %

c.What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate? (Omit the "tiny_mce_markerquot; & "%" signs in your response. Round your answers to 2 decimal places.)
Expected price$
Capital gain 

Reference no: EM132932872

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