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3, (20 Points) Design Logic is a fast-growing company that distributes 20% of its earnings as dividends. An institutional investor plans to hold the company's stock for 10 years. The investor seeks 15% rate of return and expects the stock to be traded at 30 times earnings at the end of 10 years. Current EPS is $4 [b-4). Earning will grow at a rate of 21% during the first year and decline by 3% every year during the following 4 years reaching 9% in year 5, The growth rate will continue to be 9% for the remaining 5 years. Use the combined earnings-dividend model to determine the current value of the stock. a. b. Answer How much is the growth rate after year 10? Time PVCFs EarningsDividend Future PriceCF D+FP $ 4.00 0 0.21 4 N/A 0.09 10 Stock Value = Sum PV of CFs