2- Janet Ludlow's firm requires all its analysts to use a two-stage DDM and the CAPM to value stocks. Using these measures, Ludlow has valued QuickBrush Company at S63 per share. She now must value Smile White Corporation. a. Calculate the required rate of return for Smile White using the information in the following table: December 2013 Company QuickBrush Smile White Beta 1.35 1.20 $45.00 $35.00 Market price Intrinsic value $63.00 2 Years thereafter: Note: Risk-free rate = 4 %; expected market return= 12%. b. Ludlow estimates the following EPS and dividend growth rates for Smile White: First three years: 11% per year 8% per year Estimate the intrinsic value of SmileWhite using the table above and the two-stage DDM. Dividends per share in 2013 were $1.93. c. Recommend QuickBrush or Smile White stock for purchase by comparing each company's intrinsic value with its current market price. d. Describe one strength of the two-stage DDM in comparison with the constant-growth DDM Describe one weakness inherent in all DDMs