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Based on the following financial statements: Income Statement 2012 $5,500,000 2,850,000 280.000 1,500,000 870,000 130,000 740.000 330,000 $ 410,000 2012 2011 Salos Cost of goods sold Depreciation Soling & administrative expenses EBIT Interest expense Taxable income Taxos Not income Balance Sheet, year-end Assets Cash Accounts receivable Inventory Total current assots Foxed assets Total assets Liabilities and shareholders' equity Accounts payable Short-term doo Total current to Long-term bonds Total liabilities $50,000 660,000 490.000 $1,200.000 3.100,000 $4,300,000 $ 40.000 890.000 480.000 $1,210.000 2.800,000 S4.010,000 $ 340.000 480.000 $ 820,000 2.520,000 $3,340.000 $ 450,000 550.000 $1,000,000 2.200,000 $3,200,000 Common stock Rotained earnings Total shareholders' equity Total liabilities and shareholders' equity $310.000 650,000 $ 960,000 $ 310,000 500,000 810.000 $4.300.000 $4,010,000 Assume the company paid $260,000 in dividends in 2012. You expect dividends to grow at a rate of 15% per year for the next 5-years and 5% per year thereafter indefinitely. The cost of equity for the company is 12%. Based on the Gordon growth model (DDM), what is the equity value of the company? market value of equity s $2mil $2 mil market value of equity s $3mil $3mil market value of equity s $4mil 0 $4mil