Todd Mountain Development Corporation Is Expected to Pay a Dividend

question 88

Multiple Choice

Todd Mountain Development Corporation is expected to pay a dividend of $3.00 in the upcoming year.Dividends are expected to grow at the rate of 8% per year.The risk-free rate of return is 5% and the expected return on the market portfolio is 17%.The stock of Todd Mountain Development Corporation has a beta of 0.75.Using the constant growth DDM,the intrinsic value of the stock is _________.

• A) 4.00
• B) 17.65
• C) 37.50
• D) 50.00

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