I=m Eating Restaurants is expected to pay a dividend of $5.00 per share on its commonstock in one year. The dividend is expected to grow at 4% per year forever. Investorsrequire a 12% rate of return on stocks with I=m Eating=s risk characteristics.a. What should be the current market price per share (i.e., the intrinsic value) of I=mEating=s stock?b. If the actual market price per share is $60, is I=m Eating undervalued orovervalued? How much is the stock mispriced?
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