The Duo Growth Company just paid a dividend of $2 per share. The dividend is expected to grow at a rate of 20% per year for the next 2 years and then level off to 8% per year forever. You think that the appropriate discount rate is 15% per year.

1. What is your estimate of the intrinsic value of a share of the stock?
2. If the market price of a share is equal to this intrinsic value, what is the dividend yield?
3. What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the discount rate?

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