Assume it is currently the beginning of the year 2021. A.) Given an investment horizon of 2025, and the data provided below, use a multistage dividend discount model to estimate the intrinsic value of a stock. Assume that after 2025 the growth rate of dividends will remain constant. Use linear interpolation to estimate any intermediate/unknown dividends. Show your work. B.) If the stock is currently selling for $130.50 per share, is this stock a good buy based on your intrinsic value estimate from part A?

• The dividend payout ratio for the stock is currently 35%
• The return on equity for the company is 14.0%
• Dividends per share are estimated to be $2.00/year in 2022 and $3.20/year in 2025
• For 2021 and beyond, the risk-free rate is 2.70% and is expected to remain constant
• The historical forecast for the market risk premium is 6.00%
• The beta for the company is 1.40