Calculate the market capitalization rate

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Miltmar Corporation will pay a year-end dividend of $5, and dividends thereafter are expected to grow at the constant rate of 4% per year. The risk-free rate is 4%, and the expected return on the market portfolio is 11%. The stock has a beta of 0.70.

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

  Market capitalization rate _____            %

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

  Intrinsic value $   

Reference no: EM13943689

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