Assignment:
Question 1. The Pancake Corporation recently paid a $3.00 dividend and is expected to grow at 4.5% forever. Investors generally require an expected return of at least 8% before they'll buy stocks similar to those of Pancake.
a. What is Pancake's intrinsic value? Round the answer to two decimal places. $
b. Is it a baraain if it's selling at $71 a share? (Assume that a share is worth buying when its estimated value is greater or equal to 120% of the market price.)