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What is the intrinsic value of the common stock

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Reference no: EM132504537

Assume the following:

  1. The investor's required rate of return is 13.5%
  2. The expected level of earnings at the end of this year (E1) is $6.00
  3. The firm follows a policy of retaining 30% of its earnings
  4. The return on equity (ROE) is 15%, and
  5. Similar shares of stock sell at multiples of 13.3325 times earnings per share

Question 1: What is the intrinsic value of the common stock?

Reference no: EM132504537

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