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CFA Level 2
Equity Investments

Intrinsic Value Calculation of Constant Dividend Stock

Very Easy Equity Valuation Applications Discounted Dividend Valuation

Consider Company XYZ, which is expected to pay a constant annual dividend of $5 per share indefinitely. An investor requires a return of 10% on their investment in XYZ stock. To determine the value of the stock today, an investor can utilize the Discounted Dividend Valuation model.

What is the intrinsic value of Company XYZ's stock using this model?

Hint

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