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Question: the riskfree rate of return is 5 the expected rate...

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The risk-free rate of return is 5%, the expected rate of return on the market portfolio is 16%, and the stock of Xyrong Corporation has a beta coefficient of 1.4. Xyrong pa Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 25% per year on al reinvested earnings forever. ys out 60% of its earnings in dividends, and the latest earnings announced were $700 per share. a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculetions. Round your answer to 2 decimal places.) Intrinsic value b. If the market price of a share is currently $40, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected one-year holding-period return

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