Question: Company Q's current return on equity (ROE) is 14%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book

 Company Q's current return on equity (ROE) is 14%. It pays

Company Q's current return on equity (ROE) is 14%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $70. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.90. The cost of capital is 12.5%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) X Answer is not complete. Year EPS Dividends 5,90 % $ b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Stock worth per share $ 24.49

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