Problem 2: Leni Robredo was hired as an investment analyst for XYZ Corporation. The latter asked the former to assess the viability of the investment of XYZ Corp. XYZ Corporation expects to hold the investment for one year only and sett it at the end of the holding period. Upon checking, Leni discovered that XYZ corp. will pay P4.68 in dividends per share, while the selling price at the end of the holding period can reach to P187.69 per share. The estimated cost of equity capital is 6.08%. Currently, the stock of XYZ corp. trades at P174.62. Compute for the intrinsic value of the stock after one period.

Problem 2: Leni Robredo was hired as an investment analyst for XYZ Corporation. The latter asked the former to assess the viability of the investment of XYZ Corp. XYZ Corporation expects to hold the investment for one year only and sett it at the end of the holding period. Upon checking, Leni discovered that XYZ corp. will pay P4.68 in dividends per share, while the selling price at the end of the holding period can reach to P187.69 per share. The estimated cost of equity capital is 6.08%. Currently, the stock of XYZ corp. trades at P174.62. Compute for the intrinsic value of the stock after one period.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter7: Stocks (equity) - Characterstics And Valuation

Section: Chapter Questions

Problem 15PROB

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