Equity Investments Q244

244Peter is considering the purchase of a common stock. The current annual dividend is EUR 3.5. This dividend is expected to grow at a rate of 5% annually. If the required return is 7%, the intrinsic value of the stock is closest to:

Option : A
Explanation : V = 3.5 (1.05) / (0.07 - 0.05) = EUR 184.

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