The intrinsic value of stock

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1. A firm has a tax burden of 0.7,a leverage ratio of 1.2, an interest burden of 0.6, and a return-on-sales ratio of 12%. The firm generates $2.32 in sales per dollar of assets. What is the firm's ROE?

14.0%

16.7%

11.7%

8.4%

2. Todd Mountain Development Corporation is expected to pay a dividend of $4 in the upcoming year. Dividends are expected to grow at the rate of 11% per year. The risk-free rate of return is 9%, and the expected return on the market portfolio is 17%. The stock of Todd Mountain Development Corporation has a beta of 0.65. Using the constant-growth DDM, the intrinsic value of the stock is _________.

125.00

36.36

15.87

9.90

Reference no: EM132061139

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