Todd Mountain Development Corporation Is Expected to Pay a Dividend

question 45

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 shares of Todd Mountain Development Corporation have a beta of 0.75. Using the constant growth DDM, the intrinsic value of the shares is ________.

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

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