Callmenow is a firm that designs, manufactures and sells mobile phones. As an analyst, you are assigned to determineCallmenows fundamental value and make investment recommendations. The cost of equity capital of Callmenow is assumed to be 9.1%. In addition, you have the following forecasts: All numbers below are the total amount for the firm in the entire year, in thousand $ (not in per share basis).

December 31 of 2016 2017 2018 2019 2020

Net Income $14,000 $13,650 $12,865 $12,501 $13,002

Dividends $6,000 $7,500 $8,000 $11,500 $11,822

Beyond year 5 (2020), the expected growth rate of dividends is expected to be 5% forever.

Required

1. Use the dividend discount model to estimate the value of Callmenows equity value. Callmenow has 10,000shares outstanding and the current market price is $14 per share. Will you recommend investing in the firm? Please show calculation.