Problem:
Your research has determined the following: Company (Co.) A current dvd is 1.36, Beta = 1.7 and P/E is 23. Cash flow to equity per share is 4.72. Current risk free rate is 2.5% and the expected market return is 10%. Co. A ROE is 16% and has an EPS of 3.4.
Required:
Question1: What is the current intrinsic value of Co. A? Is it a buy or sell? Note: Please provide full description.