Clark Lau plans to apply the Capital Asset Pricing Model and a two-stage dividend discount model (DDM) to value two listed firms. He has already valued Company ABC at $63 per share. He now must value Company XYZ. Required a) Calculate the required rate of return for XYZ using the information in the table below. (5 marks) b) Clark estimates the following dividend growth rates for XYZ : Estimate the intrinsic value of XYZ using the two-stage DDM and the information in the above table. Assume that the dividends per share in year 2018 were $1.72. (5 marks) c) Do you recommend ABC or XYZ for purchase by comparing each company's intrinsic value with its current market price? (4 marks) d) Describe one strength of the two-stage DDM in comparison with the constant-growth DDM. Describe one weakness inherent in all DDMs. (4 marks) Clark Lau plans to apply the Capital Asset Pricing Model and a two-stage dividend discount model (DDM) to value two listed firms. He has already valued Company ABC at $63 per share. He now must value Company XYZ. Required a) Calculate the required rate of return for XYZ using the information in the table below. (5 marks) b) Clark estimates the following dividend growth rates for XYZ : Estimate the intrinsic value of XYZ using the two-stage DDM and the information in the above table. Assume that the dividends per share in year 2018 were $1.72. (5 marks) c) Do you recommend ABC or XYZ for purchase by comparing each company's intrinsic value with its current market price? (4 marks) d) Describe one strength of the two-stage DDM in comparison with the constant-growth DDM. Describe one weakness inherent in all DDMs. (4 marks)