Which formula would best determine the intrinsic value of Cosmic Co. which currently pays dividends of...

Which formula would best determine the intrinsic value of Cosmic Co. which currently pays dividends of $1 per share and this dividend will rise to a rate of 10% forever?

A. PV of a growing perpetuity

B. PV of a growing annuity

C. PV of an annuity

D. PV of a perpetuity

Expert Solution

A stock is a form of perpetuity,

So,

Option A is correct

PV of growing perpetuity

jeff jeffy answered 2 years ago

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