China Mobile Communications Corporation (CMCC) is a Chinese state-owned telecommunication company that provides mobile voice and multimedia services through its nationwide mobile telecommunctons network. Suppose you are going to use the dividend discount model (DDM) to determine the value of CMCC's share. You anticipate that CMCC's annual dividend will be $4 per share in 2016. The market consensus is that CMCC has a return on equity (ROE) of 12 percent, a beta of 0.8, and plans to maintain indefinitely its traditional retention rate of 70 percent. The consensus estimate of the coming year's return on Hang Seng Index is 15 percent and the Hong Kong Interbank Offered Rate (HIBOR) currently offers a return of 3 percent. Required: (a) Determine the intrinsic value of CMCC's share by the end of 2015 (b) Suppose your research convinces you that the traditional retention rate for CMCC may not be maintained indefinitely, and CMCC's dividends and earnings may grow at 12 percent in 2017, 10 percent in 2018 and 9 percent thereafter. If the required rate of return remains unchanged, determine the intrinsic value of CMCC's share by the end of 2015. (c) Contrast your answers in (a) and (b) and comment on your findings. Discuss the importance of growth to this valuation model