Today 1/1/2021, you were assigned as a CFO for “ABC” company

Today 1/1/2021, you were assigned as a CFO for “ABC” company. You reviewed the divided
that was paid in the past six years, and they were as follows:
• 31/12/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5.93 per share
• 31/12/2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.1772 per share
• 31/12/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5.5154 per share
• 31/12/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.0140 per share
• 31/12/2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.45 per share
• 31/12/2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5.00 per share

Unfortunately, you are unhappy with the high volatility of the dividends growth rate, and you
decided to fix the growth rate (make it constant). Accordingly, you decided that the dividends
must have a fixed growth rate that is equal to the average six years growth rates, since
you believe that fixing the growth rate will ease the valuation process of the company’s shares.

Based on the given information and if the required rate of return (r) is equal to 7%, Answer
the following questions:
-What is the growth that your company will use starting in the year 2021?

-What will be the intrinsic value per share after your decision (1/1/2021)?