What are intrinsic value of stock d and g

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A person is considering buying stock of two home health companies that are similar in all aspect except the proportion of the earning paid out as dividend , Both companies are expected to earn $6.00 per share in the coming year , but company D ( for dividend) is expected to pay out the entire amount of dividends while company G ( for growth) is expected to pay out only one third of it earning , or$2 per share . The companies are equally risky and their require rate of return is 15 per cent. D constant growth rate is zero and G is 8.33 percent . What are intrinsic value of stock D and G.

Reference no: EM132420995

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