Red River Pharm. recently paid a dividend of 0.80. The dividend is expected to grow at 7% indefinitely. If your required rate of return based on all true and accurate information concerning the stock is 12%. What is the present (intrinsic) value of the stock to you?
b) If the stock is currently selling for $21 in the market, is the stock overvalued or undervalued.
c) If you considered purchasing the stock at $21. What would your expected return be if bought at $21, and is this greater or less than your required rate of return?