You are an analyst working for Helen Morgan. Helen has been asked to value Sundanci, Inc shares. She will use a dividend discount model. Helen believes that the companys earnings and dividends will grow at 32% for 2 years, then 13% thereafter. Sundancis dividend payout ratio is 30% and the companys earnings next year are expected to be .952. The current risk-free rate is 2% and the market risk premium is 6%. Helen has estimated Sundancis beta to be 2.0. You are asked to support Helen. Answer each of the questions below and highlight each answer in yellow.

1. What discount rate will you use?

2. What is Sundancis current dividend?

3. What is your estimate of Sundancis dividend at the end of year 2?

4. What is your estimate of Sundancis price at the end of year 2?

5. Based on your analysis what is your estimate of Sundancis price?