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You are calculating the intrinsic value of Bank Co. stock on 12/31/2020. Your assistance has collected the following information for you. Bank Co. pays annual

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You are calculating the intrinsic value of Bank Co. stock on 12/31/2020. Your assistance has collected the following information for you. Bank Co. pays annual dividends at the end of each year. 2020 dividend has already been paid. Your assistance provides you the dividends forecast from 2021 to 2024. Show your work to get full credit. Date: 12/31/2020 Bank Co. Recent price: 300 Beta: 0.8 Return on equity: 8.5% All dividends to net profit: 30% 2020 2021 2022 2023 2024 14.2 14.8 15.5 16.1 16.8 Dividend/per share (a). It is known that the current annual market return is 12.5% and risk-free interest rate is 0.5%. If you decide to use CAPM model, then what is the required return (k) you should use for Bank Co.? (keep four decimals) [6 points) (b). Since your assistance only provides you the dividends forecast until 2024, you want to assume that the dividends will grow at a constant rate after 2024. In addition, you assume after 2024, the company will have the same "Return on equity" and "all dividends to net profit" ratio as the ones on 12/31/2020. What dividend growth rate (g) will you use based on "Return on equity" and all dividends to net profit" ratio? (keep four decimals) [4.5 points) (c). You decide to use the multistage growth model to calculate the intrinsic value of Bank Co. as of 12/31/2020. First, you need to calculate the final value at the end of 2024 assuming dividends will grow at a constant rate afterwards. Based on the answer in Question (a) and (b), what's the final value of the firm in 2024. (keep four decimals) [7.5 points] (d). Next, you'll use the multistage growth model based on the forecasted dividends till 2024 provided by your assistant, and the results and assumptions in Questions (a), (b) and (c). what's the intrinsic value as of 12/31/2020? (keep four decimals) (15 points] (e). Based on your answer in (d), will you buy or sell the stock and why? [2 points)

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