The intrinsic value of Stock C is $300. The expected dividend to be paid is $3, with a dividend growth rate of 9%. Stock C requires a return of 10%, while Stock D requires a return of 13%. We determine the intrinsic value using the DDM method. The intrinsic value formula is Upcoming Dividend ÷ (Required rate of return - Growth rate). In this case, it calculates to 300, indicating the intrinsic value of Stock C.
If Airbnb guests in Malibu begin to pay hotel taxes, it could lead to an increase in the equilibrium price in that market, thus reducing overall efficiency. The equilibrium price is defined as the point at which the supply of goods and services matches consumer demand. An increase in the equilibrium price would result in decreased efficiency as supply and demand would no longer align.
