No Fly Airlines Is Expected to Pay a Dividend of $7

question 72

Multiple Choice

No Fly Airlines is expected to pay a dividend of $7 in the coming year. Dividends are expected to grow at the rate of 15% per year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 14%. The stock of No Fly Airlines has a beta of 3.00. The intrinsic value of the stock is

• A) $46.67.
• B) $50.00.
• C) $56.00.
• D) $62.50.

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