Assume a stock is priced at $$100$; calculate its intrinsic value based on the Gordon

growth DDM$,$ with the following assumptions: $D_0=$$$3,g=6$ percent, and $k=10$ percent.

Indicate whether investors should buy, hold, or sell the stock. Indicate your

recommendation if $g=7$ percent.

Explain the rationale for using price multiples to value equity, how the $\frac{P}{E}$ and $\frac{P}{B}$

multiples relate to fundamentals, and using multiples based on comparable firms.

Explain why FCFF is discounted at the WACC.

Explain the main limitation of the $\frac{P}{E}$ ratio.

Describe the three steps linking business activities to equity prices.