Calculate the market capitalization rate

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Reference no: EM131995735

Miltmar Corporation will pay a year-end dividend of $4, and dividends thereafter are expected to grow at the constant rate of 5% per year. The risk-free rate is 6%, and the expected return on the market portfolio is 12%. The stock has a beta of .92.

a. Calculate the market capitalization rate (cost of equity). (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the intrinsic value of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131995735

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