KCB, Inc. just paid a $1.00 dividend, and analysts expect it to grow 50% in each of the next three years. The dividend growth rate is expected to be 4.5% annually after that. The required rate of return on KCB stock is 11.8%. a. What is the intrinsic value of KCB stock? b. You believe that the analysts forecast about the dividend growth rate is too conservative, and that the dividend will grow 80% annually over the next two years, 50% in year three then grow at 5.0% annually. What do you expect the intrinsic value of KCB stock to be one year from today?

Assume that all bonds pay annual coupons and have par values of $1,000. Assume that P/E ratios are computed using current price and expected earnings (rather than current earnings), and that all earnings and dividend values are annual values

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