Kellogg pays $2.28 in annual per-share dividends to its common stockholders, and its recent stock price was $62.50. Assume that Kelloggs cost of equity capital is 6.4%.

a. Estimate Kelloggs expected growth rate in dividends based on its recent stock price using the dividend discount model with increasing perpetuity.

b. Further, assume the company is expected to pay $2.28 in annual dividends to its common shareholders in the future, and the expected growth rate in dividends is 2.7%. (i) Compute Kelloggs intrinsic value; (ii) Compute Kelloggs intrinsic value to reflect increases and decreases of 0.5% in both (1) cost of equity capital and (2) the expected growth rate in dividends.

c. Given the intrinsic values computed in part b, what level of confidence do we have in the intrinsic value estimate from the dividend? (Maximum words: 100)