Dividend Discount Model (DDM) a. Evergrey Corporation just paid its annual dividend of $2.00 per share. The firm is expected to grow at a rate of 15 percent for the next three years and then at 6 percent per year thereafter. The required return of the stock of Evergrey Corp is 12%. Find the expected price of the stock in one year. (6 marks)

b. A criticism of the DDM is the assumption that dividends grow at a constant rate indefinitely, which is clearly not true in the real world. Does it make it a not-so-useful model? Explain why or why not