Question 5 (12 marks) Thijs Wenneker is a portfolio manager of Netherland-based equity fund. He is currently working on valuation of Felix Ltd., which is Netherland's one of the leading manufacturers of organic chemicals. Thijs concluded that DDM is going to be the most appropriate model to value Felix Ltd. During the last seven years (fiscal year ending 31 December 2010 to fiscal year ending 31 December 2016), the company has paid dividends per share of (2.00, (2.25, (2.75, (3.50, (4.50, 65.75, and (7.25, respectively. These dividends suggest a cumulative average growth rate (CAGR) of just above 20.0%. After some discussions with equity analysts, Thijs decided to employ three-stage DDM with a linearly declining growth rate in Stage 2. This company is considered to be an average growth company, and assumes that Stage 1 will last 5 years and Stage 2 will last 10 years. Stage 1 growth rate is assumed to be 25%, while stage 3 growth rate is assumed to be only 5%. The required rate of return on equity for Felix Ltd. is estimated to be around 10%. Estimate the current value of the stock