LG 4 P7-12 Common stock valuation: Variable growth You are analyzing the stock of First Health Company, a healthcare company with a current stock price of $78. The CHAPTER 7 Stock Valuation 351 company just paid an annual dividend of $5, and it is expected that the dividend will grow at 4% in the coming two years and then increase by 5% per year thereafter. You estimate that the required return of the stock is 12%. Estimate the stock price of First Health Company by using a two-stage dividend discount model. Is the stock fairly priced, overpriced, or underpriced?||