financial instruments and markets

2. Equity valuation (i) Derive the DDM (Dividend Discount Model) (10 marks) (ii) Discuss how to utilise this model to evaluate stock (20 marks) (iii) Let's say a corporation anticipates paying out a dividend of 2.50 per share over the course of the first two years of operation, and then anticipates that amount will increase by 12% over the course of the next four years. After the fourth year, the dividend payment increases at a consistent rate of 6% and then stabilises at 6% afterwards. What is the price of one share of this stock? (20 marks)