Estimate of the intrinsic value of collar corporation

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Joan is analyzing the Collar Corporation's stock. Collar is currently trading at $10.00 per share. Joan uses CAPM to model the stock of Collar. Joan use the annual 3 percent yield on Ten Year Treasuries as the risk free rate. She estimates the expected equity risk premium to equal 8 percent and Collar's beta is equal to 1.25. Collar's recent average annual historical growth has been equal to 4 percent, which she uses as the growth rate in the Gordon growth model. The current (has already been paid to shareholders) annual dividend per share is $1.25 per share. What is Joan's estimate of the intrinsic value of Collar Corporation?

Reference no: EM132010295

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