A recent investment analysts report for Coca-Cola (KO) provided the following information:

Beta = 0.66

Risk-free rate, rRF = 3.0%

Market risk premium, RPM = 5.0%

Forecasted 2022 Dividend (D1) = $1.68

b. Assume that today is January 1, 2022, and that at t = 1 the company will pay the dividend per share given above. (That is, assume that this forecasted 2022 dividend is D1, and that this is the first cash flow you receive as an investor.) Assume that the dividend growth rate for the three years after 2022 (2023-2025, which correspond to Years 2, 3, and 4) is 10%. Assume that after 2025 (after Year 4), the dividend grows at a long-run constant growth rate of 4.0% per year.

(i) Given these assumptions, what is your estimate of the stocks intrinsic value? (11 points)

(ii) Compared to its current stock price, would you conclude that the stock is undervalued or overvalued? Provide a brief explanation. (1 point)