Question 3. You have been asked to value the equity of IntelligentChat Inc using various techniques including the dividend discount model (DDM), the residual income model at equity level (RIVM) and the abnormal earnings growth model (AEG), as well as the P/E multiple. The following information has been provided to you: Current book value is \\( \\$ 48.0 \\) per share. The forecast earnings per share (EPS): Year 1, \\$6.0; Year 2, \\$6.30 The company has a constant dividend payout ratio of \60. For year 3 and beyond, the forecast growth in book value and earnings will be \5. Assume the firm is all equity financed. It has a beta of 1.0 . The risk-free rate is \4 and the market risk premium is \6.2. REQUIRED: (a) Estimate residual income for years 1-3, and abnormal earnings growth for years 2- 3. (25 marks) (b) Calculate the value of IntelligentChart Inc. using the DDM, RIVM and AEG models at the beginning of Year 1 and Year 2. (40 marks) (c) Calculate the forward P/E multiple and value of IntelligentChart Inc. using the P/E approach at the beginning of Year 2. Discuss the assumptions under which the P/E approach works. (15 marks) (d) Compare and contrast the DDM, RIVM and AEG models. (20 marks) [Total 100 marks]