Question: ) Company Qs current return on equity (ROE) is 14%. It pays out 50% of earnings as cash dividends (payout ratio =50%). Current book value

  1. ) Company Qs current return on equity (ROE) is 14%. It pays out 50% of earnings as cash dividends (payout ratio =50%). Current book value per share is $50. Assume that the ROE and payout ratio stay constant.
  1. What are company Qs EPS and dividends next year (year 1)?
  2. What is the growth rate of the dividends payments?
  3. What is company Qs dividends in year 2, year 3?

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