Westsyde Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 6%, and the expected return on the market portfolio is 12%. Analysts expect the price of Westsyde Tool Company shares to be $29 a year from now. The beta of Westsyde Tool Company's stock is 1.2.
A. What is the appropriate required return on Westsyde Tool's stock?
B. Using a one-period valuation model, what is the intrinsic value of Westsyde Tool Company stock today?