Final answer:
The intrinsic value of Brentwood's stock today, given that it will start paying a dividend of $9.55 in six years and continue annually at a required rate of return of 9.1%, is approximately $5.69 when rounded to the nearest penny.
Step-by-step explanation:
The intrinsic value of a stock today based on its future dividend payments can be determined using the concept of present discounted value (PDV). In the case of Brentwood, which will pay its first dividend of $9.55 exactly 6 years from now and will continue to do so annually, we discount these future dividends back to their present value using the investors' required rate of return of 9.1%. The intrinsic value is calculated as: Intrinsic value = Dividend / (1 + required rate of return)^number of years For Brentwood, the intrinsic value is Intrinsic value = $9.55 / (1 + 0.091)^6 Calculating it out we have: Intrinsic value = $9.55 / (1.091)^6 Intrinsic value = $9.55 / 1.6771 Intrinsic value ≈ $5.69 (rounded to the nearest penny) The intrinsic value of Brentwood's stock today, assuming the $9.55 dividend is constant and begins 6 years from now, is approximately $5.69.