Westsyde Tool Company Is Expected to Pay a Dividend of $2.00

question 56

Multiple Choice

Westsyde Tool Company is expected to pay a dividend of $2.00 in the upcoming year. The risk-free rate of return is 6% and the expected return on the market portfolio is 12%. Analysts expect the price of Westsyde Tool Company shares to be $29 a year from now. The beta of Westsyde Tool Company's shares is 1.20. Using a one-period valuation model, the intrinsic value of Westsyde Tool Company shares today is ________.

• A)$24.29
• B)$27.39
• C)$31.13
• D)$34.52

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