Problem Estimate the intrinsic value of the stock for company ABC. Dividends were just paid at $8 per share and are expected to grow by 5%. You require 20% on this stock given its volatile characteristics. If the current market value of the stock is $40, would you buy or sell the stock. PROBLEM 3 (10 POINTS) You were given estimates of free cash flow from the company, presented below, and you have no reason to doubt them. You know that these cash flows will not grow at such a pace indefinitely and you are likely to be conservative on the estimates of the future of any future cash flows. You think that a 2% growth is achievable. Current assets are equal to $10 million, current liabilities are $15 million, long-term debt is equal to $6 million, and preferred shares are equal to $2 million. Years Cash flows for years 0 to 5 0 1 2 4 5 6 3 7 4 8 5 9 (In $ millions) The T-bill offers a 3% rate of return while the S&P market index returned 32% to investors last year. You estimate that the company has an average risk compared to the market (you should know what this implies) Estimate the market value of common equity