Problemyour broker has recommended that you purchase stock, Ask an Expert

Accounting

Problem:

Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($16.00). Dividends have consistently grown at a rate of 3.50%. Analysts estimate that the stock has a beta of 1.41. The current risk-free rate is 2.60% and the market risk premium (RM - RF) is 8.50%.

Required:

Assuming that CAPM holds, what is the intrinsic value of this stock?

$155.56
$149.39
$161.71
$136.14
$163.73

Note: Please show basic calculation

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167321

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