1. Coca Cola is currently paying an annual dividend of $1.64 (D₀). Assume the cost of equity (K_e) for the food and drink enterprise is 5.00% and the annual dividend growth is projected to be 2.00% per year. First, estimate the fair value of the companys stock using the dividend growth model [V= D₁/(k_e g)]. Second, if Coca Cola stock is selling @ $50 per share and the cost of equity is 5.00%, briefly indicate if and why the market is applying a higher or lower dividend growth rate than that assumed to estimate fair value.