the company's stock. Consider the case of Portman Industries: Portman Industries
the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.88 per share. The company expects the corming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. The risk-free rate (Rr) is 5.00%, the market risk premium (RPM) is 6.00%, and Portman's beta is 1.00 Term Value Dividends one year from now (D1) Horizon value (P1) Intrinsic value of Portman's stock | Assuming that the market is in equilibrium, use the information just given to complete the table. | Now let's apply the results of your caiculations to the following situation: Portman has 600,000 shares outstanding, and Judy Davis, an investor, holds 9,000 shares at the current price (computed above). Suppose Portman is considering issuing 75,000 new shares at a price of $41.96 per share. If the new shares are sold to outside investors, by how much will Judy's investment in Portman Industries be diluted on a per-share basis? O $1.72 per share O $1.01 per share O $0.82 per share O $0.70 per share Thus, Judy's investment will be diluted, and Judy will experience a total of
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