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*Using the 2-Stage Dividend Discount Model (DDM) compute the intrinsic Value for Company X based on the following information
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Answer #1

D0 = 1.25

D1 = 1.25 (1+0.15) = 1.4375

D2 = 1.4375 (1+0.15) = 1.653125

D D2(1+G) -G Valueof Stock = a (1 + r) + (1+r)2 + (1 + r)2

= 1.4375 (1+0.08) 「 1.653125 1+0.08)? | 1.653125(1+0.05) 0.08-10.05 1+0.08)

= $ 53.35

Value of the Stock will be $ 53.35

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