Solution:- Given in Question-
Dividend (DPS0) = $1.20
Required Rate Of Return(r) = 14%
Growth rate(g) = 10%
To Calculate stocks Intrinsic value-
Stock Intrinsic Value =
Stock Intrinsic Value =
Stock Intrinsic Value = $30.
Dividend at year 3-
DPS3 = DPS0 ( 1+ G)3
DPS3 = $1.20 ( 1 + 0.10)3
DPS3 = $1.5972
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