Q$4)$ Dividend Discount Model $($DDM$)$

a$)$ A company just paid a dividend of $D_0=$$$1\mathrm{.}10.$ The dividend is expected to remain constant. If

the discount rate $($market capitalization rate$)$ of the stock is $k=14\%,$ what is the intrinsic price

of the stock $P_0?$

b$)$ A company just paid a dividend of $D_0=$$$1\mathrm{.}15.$ The dividend is expected to grow at a rate of $g=$

$3\%$ per year. The company has a discount rate $($i$.$e$.,$ market capitalization rate$)$ of $k=8\%.$ What

is the intrinsic value of the stock $P_0?$