Question: An analyst is provided the following information regarding Alpha Ltd. The company's current book value per share equals $8.00. The company's EPS for the next

An analyst is provided the following information regarding Alpha Ltd. The company's current book value per share equals $8.00. The company's EPS for the next 3 years is expected to be $2.25, $3.00, and $4.50 respectively. The company's DPS for the next 3 years is expected to be $1.25, $2.00, and $14.50 respectively. The Year 3 dividend is expected to be a liquidating dividend, i.e.. the company is expected to cease its operations at the end of Year 3 and distribute its entire book value in a dividend. Given a required rate of return on equity of 10%: Calculate Alpha's book value and residual income for the next 3 years. Estimate the intrinsic value of Alpha's stock using the residual income model. Estimate the intrinsic value of Alpha's stock using the dividend discount model
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