Currently omega corporationrsquos shares are selling at 60, Ask an Expert

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Currently Omega Corporation’s shares are selling at $60 per share and company is paying $5 per share dividend. Dividends are expected to grow at an annual rate of 3% for foreseeable future. Required rate of return for investors is 12%. At the same time, Heller Corporation’s shares are selling at $58 per share and company is paying $4 per share dividend. Dividends are expected to grow at an annual rate of 5% for foreseeable future. Required rate of return for investors is 12%

a. Calculate the current value of each stock on the basis of Dividend Discount Model.

b. On the basis of above calculation, determine either each stock is overvalued or undervalued.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91536407

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