Hand in Problem Set 1 Please hand a pamr copy and Departmental Cover Sheet of your work to your class teacher at the begjnnlng of class 4 (week 5). Fin-Tech, a nance and technology rm, oated its shares today. The IPO prospectus notes that Fin-Tech does not plan to pay any dividend in the foreseeable future and reported annual earnings of $4 per share (this is the earning as of today). Fin-Tech's Return on Equity is 15% and expected to stay the same forever. Investors agree that the appropriate discount rate is 10% and that in 4 years the firm will start distributing a dividend keeping the payout ratio constant after that. Fin-Tech's share price closed at $52.56. This trading price is the consensus valuation among investors and analysts. 1. What is the payout ratio on and after year 4 implied by investors' valuation? 2. What is the implied PVGO? Show all of your calculations and explain your approach