Using constant-growth dividend discount model

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Todd Mountain Development Corporation is expected to pay a dividend of $ 3.71 in the upcoming year. Dividends are expected to grow at the rate of 3 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 0.8. Using the constant-growth Dividend Discount Model and CAPM to estimate the cost of equity, what is the intrinsic value of the stock?

Reference no: EM131940774

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