4. Equity valuation (a) Derive the Dividend Discount Model (DDM) (10 marks) (b) Discuss how to use this model to evaluate stocks (20 marks) (c) Suppose that a company expects to pay a 2.50 dividend in the first 2 years and then expects it to grow at 12% through the end of year 4. After year 4 dividend payment grows at the constant rate of 6% and stabilizes at 6%. What is the value of this stock? (20 marks)