Compute the intrinsic value of stock

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Todd Mountain Development Corporation is expected to pay a dividend of $ 4.69 in the upcoming year. Dividends are expected to grow at the rate of 2 percent per year. The risk-free rate of return is 2 percent, and the market risk premium is 9 percent. The stock of Todd Mountain Development Corporation has a beta of 1.4. Using the constant-growth Dividend Discount Model and CAPM to estimate the cost of equity, what is the intrinsic value of the stock?

Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, dividends are expected to grow at the rate of 4 percent per year. An appropriate required return for the stock is 11 percent. Using the multistage DDM, compute the intrinsic value of the stock.

Reference no: EM131940691

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