Janet Ludlows firm requires all its analysts to use a two-stage DDM and the CAPM to value stocks. Using these measures, Ludlow has valued QuickBrush Company at $63 per share. She now must value SmileWhite Corporation.

a. Calculate the required rate of return for SmileWhite using the information in the following table December 2010 Quick Brush 1.35 $45.00 $63.00 SmileWhite Beta Market Price Intrinsic Value S28 2 Note: Risk-free rate = 3%; expected market return = 15% Instruction: enter your answer as a percentage rounded to 1 decimal place Required rate of return b. Ludlow estimates the following EPS and dividend growth rate for SmileWhite: First three years: 114% per year Years thereafter: 112% per year Estimate the intrinsic value of SmileWhite in December 2010 using the table above and the two-stage DDM. Dividends per share in 2010 were $1 Instruction: enter your answer as a decimal number rounded to 2 decimal places YeaDividends 2010 $1.00 2011S 2012 S 2013 S 2014 S Intrinsic stock value in 2013: $ Intrinsic stock value in 2010: $