Q$2)$ Dividend Discount Model $($DDM$)$

a$)$ A company just paid a dividend of $D_0=$$$5\mathrm{.}00$ on its preferred stock. The dividend amount will

remain constant. The discount rate $($i$.$e$.,$ market capitalization rate$)$ of the company is $k=8\%.$

What is the intrinsic value of the stock $P_0?$

b$)$ A company just paid a dividend of $D_0=$$$2\mathrm{.}50.$ The dividend is expected to grow at a rate of $g=$

$5\%$ per year. The discount rate $($i$.$e$.,$ market capitalization rate$)$ of the company is $k=6\%.$

What is the intrinsic value of the stock $P_0?$

c$)$ A company just paid a dividend of $D_0=$$$3\mathrm{.}00.$ The dividend is expected to grow at a rate of $g=$

$2\%$ per year. The market price of the stock is $P_0=$$$30.$ What is the discount rate $($market

capitalization rate$)$ of the stock?