A stock just paid a $5.00 dividend, expected to grow at 6% for years 1 and 2, and then at 3.5% thereafter. What is the stock's intrinsic value if the investor requires a 9% return? g

Value of the share 98.57 dollars

Explanation:

First, we sovle for dividends of year 1 and 2

D1 5 x 1.06 = 5.30

D2 5.30 x 1.06 = 5.618

Then this will grow at 3.5% per year while we require a return of 9%

we use gordon to detemrinate this value:

Last, we determinate the present value of these three cash flow and get the intrincis value:

being rate = 0.09

client registration system, resource management system, clinical management system, patient information database, common use-system interface

explanation: