Value Line is an investment research firm that provides estimates of the fundamental value of various companies' stocks. Suppose that Value Line projects that Valorous Corporation will pay a dividend of $1.80 per share at the end of this year and a dividend of $2.40 per share at the end of the following year. Value Line also projects that the price of Valorous' stock will be $44 per share after two years. If Valorous has an equity cost of capital of 8%, what is Value Line's estimate of the current fundamental value of one share of Valorous stock?
- $42.40
- $39.27
- $40.22
- $41.45