Dell Computer has decided on a major investment that will require a substantial early cash outflow and inflows will be relatively late. As a result, it is expected that the firm's dividends will have a negative growth of 5 percent for the first three years. Further, the firm expects zero growth for the fourth and fifth year and then to have a constant growth of 6 percent. The firm's required rate of return is 9% and the most recent dividend paid (D0) was $1.

a. What is the intrinsic value of the stock now?

b. Suppose the growth rate is 12%, what would the intrinsic value be? What alternative method could you use to estimate the intrinsic value in this case? Discuss.