1. Company A’s stock is trading at $40 per share. Furthermore, Company A requires a rate of return of 10%. Currently, Company A pays $2 dividend per share for the following year and this is expected to increase by 4% annually. Calculate the intrinsic value of the stock.
2. Green Cooper Inc. gives dividend of $1.18 which grows annually at the rate of 3.56% and equity cost of capital is 8%. What is theoretically the current price of Green Cooper’s stock.