Question: Exercise 2 . Consider a company, which stock is currently trading at 8 . 0 0 . The company has just paid a dividend of

Exercise 2. Consider a company, which stock is currently trading at 8.00. The company has just paid a
dividend of 0.30 per share. You expect the dividend to increase by 10% for the next two years and then
increase by 5% per year forever. Suppose that your required return in case of this company is 8%. Estimate
the value of this company's stock by using a two-stage Dividend Discount Model and judge whether this
company's stock is undervalued, fairly valued, or overvalued.
Exercise 2. Consider a company, which stock is currently trading at

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