Using the constant growth-the intrinsic value of stock

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Reference no: EM131617773

You require a return of 10% if you invest in either stock A or B. Each of the stocks is expected to pay a dividenfd of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant growth DDM, the intrinsic value of stock A ________.

a. Will be less than intrinsic value of stock B

b. Will be the same as intrinsic value of stock B

c. More info needed,

d. Will be higher than intrinsic value of stock B

Reference no: EM131617773

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