Question 20 (10 points) ABC Corporation has just made its earnings announcement. Net income for the previous year was $12,000,000. The corporation had 2,500,000 shares outstanding. The dividend payout ratio for the year was 35% It is expected that the net income for ABC Corporation will be growing at a rate of 9% per year for the next three years. During these three years, the corporation will have a retention ratio of 55%. Starting the fourth year, ABC Corporation intends to adopt the residual dividend approach and is estimated to experience a constant growth rate of 5% per year, in perpetuity. The company has a planned capital expenditure in the amount of $5,000,000 in the fourth year, and this will be growing by 5% per year as well. The debt-to-equity ratio and the applicable tax rate are expected to remain at 25% and 30%, respectively, throughout the foreseeable future. The pre-tax cost of debt is 3.5%, the risk-free rate is 1%, the beta of the stock is 1.1. and the expected market return is 10%. Calculate the current intrinsic value of ABC Corporation. Show your work. Question 20 (10 points) ABC Corporation has just made its earnings announcement. Net income for the previous year was $12,000,000. The corporation had 2,500,000 shares outstanding. The dividend payout ratio for the year was 35% It is expected that the net income for ABC Corporation will be growing at a rate of 9% per year for the next three years. During these three years, the corporation will have a retention ratio of 55%. Starting the fourth year, ABC Corporation intends to adopt the residual dividend approach and is estimated to experience a constant growth rate of 5% per year, in perpetuity. The company has a planned capital expenditure in the amount of $5,000,000 in the fourth year, and this will be growing by 5% per year as well. The debt-to-equity ratio and the applicable tax rate are expected to remain at 25% and 30%, respectively, throughout the foreseeable future. The pre-tax cost of debt is 3.5%, the risk-free rate is 1%, the beta of the stock is 1.1. and the expected market return is 10%. Calculate the current intrinsic value of ABC Corporation. Show your work