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10. (DDM w/dual growth rates) Fanny Mable, Inc, a regional confectionary manufacturer plans to roll out a new product for the holiday season. This expansion
10. (DDM w/dual growth rates) Fanny Mable, Inc, a regional confectionary manufacturer plans to roll out a new product for the holiday season. This expansion is expected to capture a significant share of the market for the next five years. Afterwards, its free cash flows are expected to flatten out. FannyMable has just paid a cash dividend of $1.25 and is expected to increase its payout by 15% for the next five years. Afterwards, it plans to pay a constant dividend. FannyMable faces a required return of 15%. a. Draw a free cash flows diagram of its dividends. b. What is FannyMable's intrinsic value? c. If the market value of FannyMable is $25, should it be purchased? Explain
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