3)1 C) s (): 0) Section 3: Equity Valuation Use the information below to answer questions (a)-(g) for Hofstra Grocery Co. (HGC). Price 52 Week High Dividend PE Beta EBITDA Market/Book ROE FCFE Fraction of Retained Earnings E[Rmkt Rf EPBGC Hofstra Grocery Co. $50.00 $58.62 $1.25 2.48 0.82 4.17 4.18 10.82% 3.12 32.15% 11.50% 2.00% $55.80 Industry Average $98.50 $102.14 $2.10 2.12 0.66 10.89 3.95 8.95% 3.85 7.96%

Section 3: Equity Valuation Use the information below to answer questions (a)-( g ) for Hofstra Grocery Co. (HGC). a) PtG= 73215x+107259/248=2016 Undenaluel under vanued d) Using the conntant growth divisend modet, do you think that HGC is endervalued of overvilaed? arvilued e) Assume that HGC will retain 90% of its carnings for the next two years and earn aa ROE of 30%. during this time. After this, 1 GGC will retain 32.15% of its earnings and earn an ROE of 15%. Using the dividend growth stage model, do you think that HGC is undervalued or overvalued? Why