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Calculate the intrinsic value of maxine corp

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Reference no: EM132816397

Maxine Corp. is enjoying a surge of business prosperity in the recent few years. It just paid common dividends at $0.02 per share to its shareholders last year (D0=$0.02). It is expected that the dividends will grow at 70% per year for the next 4 years, at 30% for the following 2 years, and at a constant rate of 7% per year thereafter. Beta for Maxine Corp. common stock is estimated to be around 1.2; risk-free interest rate is approximately 5%; the market risk premium is around 10%. Calculate the intrinsic value of Maxine Corp. common stock today (i.e. at time 0).

Reference no: EM132816397

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