Which recommendations would you make to the client

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Reference no: EM131926133

Question: Your client Holly Lynne has a 15% required rate of return. She is considering investing in XYZ, Inc., which paid an annual dividend of $0.75 this year and is projected to increase its earnings and dividends by 10% annually. The current market price is $15.40.

Which of the following recommendations would you make to the client?

a. The intrinsic value of the stock is $16.50, so the client should not purchase this stock since the company is currently overvalued.

b. The intrinsic value of the stock is $16.50, so the client should purchase this stock since the company is currently undervalued.

c. The intrinsic value of the stock is $15.00, so the client should not purchase this stock since the company is currently overvalued.

d. The intrinsic value of the stock is $15.00, so the client should not purchase this stock since the company is currently undervalued.

Reference no: EM131926133

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