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ACME, Inc. expects its current annual $3.25 per share common stock dividend to remain the same...

ACME, Inc. expects its current annual $3.25 per share common stock dividend to remain the same for the foreseeable future. What is the intrinsic value of the stock to an investor with a required return of 65%? Round to two decimal places.

To answer the question:

(1) Describe and interpret the assumptions related to the problem.

(2) Apply the appropriate mathematical model to solve the problem.

(3) Calculate the correct solution to the problem.

Solutions

Expert Solution

Price of stock = Annual Dividend/Interest Rate

Price of Stock = 3.25/0.065

Price of Stock = $50.00

jeff jeffy answered 2 years ago
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