Business, 03.07.2020 21:01 breannaasmith1122

Rollins Enterprises just paid a dividend of $3.20 per share. The dividends are expected to go up 15% each year for the next 4 years. After that, the dividends will grow at a constant rate of 3.2% per year. The risk-free rate is 4%, and market risk premium is 7%. Firm has a beta of 1.35. Required:
a. What is your estimate of the intrinsic value of a share of the stock?
b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield?
c. What do you expect its price to be 1 year from now? What is the implied capital gain?
d. Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?

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Rollins Enterprises just paid a dividend of $3.20 per share. The dividends are expected to go up 15%...

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