Three-Stage Dividend Discount Model

This problem practices a core FIG valuation method, the dividend discount model, and tests whether you understand why banks are often valued on equity cash flows rather than enterprise cash flows. It also checks whether you can structure a multi stage forecast, move from explicit dividend projections to a more normalized mature period, and then think through terminal value using a continuing assumption for long run payouts. Interviewers ask this because bank valuation depends heavily on capital generation, payout policy, and returns on equity, so candidates need to show they can connect profitability, reinvestment, and shareholder distributions in a clean valuation framework.