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    Stocks and Intrinsic Value

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    The Window corporation recently paid a $3 dividend, and is expected to grow at 5% forever. Investors generally require an expected return of at least 9% before they'll buy stocks similar to Window.

    a. What is Window's intrinsic value?
    B. Is it a bargain if it's selling at $76 a share ?

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    Solution Preview

    a. What is Window's intrinsic value?
    D = 3, g =5% and K = 9%
    By using DDM model, ...

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