a. Cost of equity capital = 4.6% + (0.7 5%) = 8.1%

b. Intrinsic value = 51.41 /0.081 = 517.41

C. Given the historical growth in P&G's business, especially its acquisition of Gillette, it is unreasonable to expect P&G's business, as well as dividends, to stop growing after 2007 Hence, using the DDM model with a constant perpetuity would likely underestimate P&G's intrinsic value.

please provide all work through excel.