Sure Tool Company Is Expected to Pay a Dividend of $2

question 96

Multiple Choice

Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4% and the expected return on the market portfolio is 14%. Analysts expect the price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Company's stock is 1.25.
-What is the intrinsic value of Sure's stock today?

• A)$20.60
• B)$20.00
• C)$12.12
• D)$22.00
• E)none of the above

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