Company A has introduced a new product. As a result, you expect earnings and dividends to grow at 12% for the next 3 years. After which the growth rate will fall to 5% indefinitely. The beta on Company As stock is 2, the risk free rate of interest is 6% and the market risk premium is 6%. (i) Calculate the fair value of the stock if the last dividend (Do) was 60 pence. (ii) Calculate the fair value for the stock at the end of year 3 and at the end of year 4. (iii) If your projections prove wrong and the stock grows only at 10% per year but for 5 years and then falls to 4% indefinitely will you have overpaid or underpaid for the stock, if you pay the fair value calculated from part (i)?