Hi missing question #3

question 1 and 2 its done in case u need it

1) Suppose investors expect the yearly dividend paid by Fabian's Flowers Corp to be 5/share permanently (equal to its eps).

Assume the interest rate used by investors to discount these cash flows is 3% and the risk premium investors assign is 8.5%. Applying the Dividend Discount Model, what is price-per-share.

1)Discount rate= Interest rate by investors+Premium

= 3%+8.5%

= 11.5%

Price per share= Annual dividend/ Discount rate

= 5/11.5%

= 43.48

2) If Fabian's Book Value-per-share is 33, what must be the ROE investors are predicting for Fabian's?

ROE= EPS/ Book value per share

= 15.15%

3) E.C. What if investor investors Fabian's not to be able to pay dividends for the next two years, but after that the yearly dividend will be 5/share permanently? All else the same as in #1.