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CFA Level 2
Equity Investments

Intrinsic Value Calculation Using Gordon Growth Model

Very Easy Equity Valuation Applications Discounted Dividend Valuation

XYZ Corporation has a projected dividend of $2.00 per share for the upcoming year. The company is expected to grow its dividends at a constant rate of 5% per year indefinitely. If the required rate of return on XYZ's stock is 10%, what is the intrinsic value of the stock according to the Gordon Growth Model?

Hint

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