Question (3) GE paid the most recent dividend D0 = $0.25. The market expected return is E(rM) = 3% and risk free rate is 0.5%. Delta has a beta of 1.2. In the next two years, the dividend grows by g1 = 20%. At the end of second year, the company starts a constant growth method with a plowback ratio b = 50%, and ROE = 4%.

What the intrinsic value is today?

A. P0 = 23.47.

B. P0 = 22.85.