Procter and Gamble (P&G) is one of the leading global product companies, owning some of the most valuable brands in the world. P&Gs long history of payment of dividends makes it good candidate for the dividend discount model, and while it is a large company, its brand names and global expansion provide it with a platform to deliver high growth at least for the next few years. Consequently, we assume that the company will deliver good growth in the next five years before it stabilizes to a steady steady-state rate. P&G reported $12,736 million in earnings for 2010 and paid out 50.00% of these earnings as dividends. On a per share basis, earnings were $3.82 and dividends were $1.92 in 2010. Assume the stock beta of 0.90, a risk free rate of 4.0%, and a mature market equity-risk premium of 5% to estimate the cost of capital. Consider that the stock beta would rise to 1 after year 5. The firms current return on equity is 20.00% with a payout ratio of 50.00%. It is expected the P&G would continue to maintain 20% return on equity and 50% payout ratio in the next five years. After the year 5, assume that the long-term return on equity would be 16% and the payout ratio would rise to 75% in perpetuity. Required: Estimate the market value of P&Gs equity following the two-stage dividend discount model and showing the following details. (i) Cost of equity capital and the long-term growth in dividends after 2015. (ii) Forecast dividends for the first five years and the terminal value of the stock at the end of 2015. (iii) Ex-dividend market price of the stock at the end of 2010.