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Question 1 Chief Medical, Inc. is a little - known producer of heart pacemakers. The earnings and dividend growth prospects of the company are disputed

Question 1
Chief Medical, Inc. is a little-known producer of heart pacemakers. The earnings and dividend growth prospects of the company are disputed by analysts.
Albert Bender at Goldman Sachs is forecasting 5% growth in dividends indefinitely. However, Mary Montgomery at Morgan Stanley is predicting a 20% growth in dividends, but only for the next three years, after which the growth rate is expected to be 4% forever.
The Chief Medical annual dividend per share was $3.00 for the most recent 12 months and was paid recently. Stocks with similar risks currently are priced to provide a 14% rate of return.
a. What is the intrinsic value of a share of the stock according to Albert?
b. What is the intrinsic value of a share of the stock according to Mary?

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