Adams and Collin Enterprises expect earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to 3%. The company's last dividend was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

1.What is the terminal (or horizon value)?

2.What is the required rate of return by investors?

3.What is the intrinsic price of this company's stock?

4.If the stock is currently priced at $40.00, given your answer to Question 3, would you purchase this security?