Problem:
Your broker has recommended that you purchase stock in National Bank & Trust, Inc. National Bank & Trust recently paid its annual dividend ($16.00). Dividends have consistently grown at a rate of 3.50%. Analysts estimate that the stock has a beta of 1.41. The current risk-free rate is 2.60% and the market risk premium (RM - RF) is 8.50%.
Required:
Assuming that CAPM holds, what is the intrinsic value of this stock?
- $155.56
- $149.39
- $161.71
- $136.14
- $163.73
Note: Please show basic calculation