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sergey [27]
3 years ago
14

tangshan China's stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent ind

efinitely. In addition, Tangshan China's most recent dividend was $5.50. The expected risk free rate of return is 3 percent, the expected market return is 8 percent, and Tangshan has a beta of 1.20.
Business
1 answer:
Aloiza [94]3 years ago
7 0

Answer: Tangshans required rate of return according to CAPM= 3+1.2*(8-3)

R=9%

Intrinsic Value= 5.5*1.05/0.09-0.05= $144.375

Stock is Overvalued as its intrinsic value is $144.375 but it is selling in the market for $160

Explanation:

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