What would be Victoria shares intrinsic value per share

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Question - Victoria Company's beta is exactly 1.5, and the market risk premium is 10%, with a risk-free rate of 4%. The company's most recent dividend was $10 per share, and the dividend is expected to grow at 20% for the next three years and then grow at 4% per year indefinitely.

1. What would be Victoria's shares' intrinsic value per share?

2. What would be the dividend yield?

3. If all the expectations stay the same as stated, what would the share price be a year from now? What would be your capital gain if you owned a share for the year? Show that this gain is consistent with the expected dividend yield calculated above.

Reference no: EM132904642

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