Chapter 13, Problem 10PS

Miltmar Corporation will pay a year-end dividend of $\$\text{4}$ and dividends thereafter are expected to grow at the constant rate of $\text{4}\%$ per year. The risk- free rate is $\text{4}\%$ , and the expected retune on the market portfolio is $\text{12}\%$ . The stock has a beta of $0.\text{75}$ . What is the intrinsic value of the stock? $\left(\text{LO 13}-\text{2}\right)$