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You are interested in the ABC Corp and week to place a value on the...

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Question

Accounting

You are interested in the ABC Corp and week to place a value on the
3 stock so you can tell whether it is over-valued or under-valued
4 at this time.
5 You have obtained the following financial data.
6 It is both micro and macro related data.
7 The micro data of ABC Corp:
8 The current price of ABC stock is $33.15
9 It recently paid a dividend of $2.83
10 Constant dividend growth rate 6.98%
11 The macro data of ABC corp:
12 Treasury bills have a rate of 1.88%
13 The return on the S&P Index is 12.11%
14 The stock has a beta of 1.78
15
16 What is Alpha and what is the real intrinsic value os ABC stock?
a.

Alpha = -0.0398

Real Intrinsic Value = $23.09
b.

Alpha = -0.3980

Real Intrinsic Value = $33.09
c.

Alpha = -0.0598

Real Intrinsic Value = $32.09
d.

Alpha = -0.0893

Real Intrinsic Value = $23.09

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