Other information: Required rate of return = 18% After year 3, dividends will grow at a rate of 6% per annum for the foreseeable future The company has 1 million shares. Help John with his project by calculating the value of his company using the Dividend Discount Model (DDM). (4 marks) To add rigor to the valuation you decide to stress the model under different economic conditions. One is which market risk premium (MPR) increases and one is which it decreases. What variable in your calculation with be affected by the MPR and what do you expect to happen to the value of the company under an increase in MPR and under a decrease in MPR. (No calculations required, directional effect expected). (3 marks) Rf+ (Rm-Rf)*B... Rf= 5% Rm 19% 7 19-5=14% ..CAPM (Ke)