Delphi Products Corporation currently pays a dividend of $2 per share, and this dividend is expected to grow at 15% percent annual rate for many years to come. The corporation has found an index of systematic risk of 1.60. Short-term Treasury securities rate is 10% and the expected return on the market portfolio is 14%. What will happen to the intrinsic value per share? If the stock is currently selling for $187, is this stock overvalued or undervalued andwhy?
NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.
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