Question: Question 1 (10%) In practice, a common way to value a share when company pays dividends is to value the dividends over the next five

Question 1 (10%) In practice, a common way to value a share when company pays dividends is to value the dividends over the next five years or so, then find the terminal' share price using a benchmark PE ratio. Suppose a company just paid a dividend of $1. The dividends are expected to grow at 12% over the next five years. In five years, the estimated EPS is 2.9372 and the price in five years is $44.0585 a) What is the Payout Ratio in five years? b) What is the PE ratio in five years? c) What is the share price today, assuming a required rate of return of 15% on this share? Complete the table below: DI (4dp, 1%) Payout Ratio (2dp, express in %) (2%) D2 (4dp, 1%) PE Ratio (2dp) (2%) D3 (4dp, 1%) Po (2dp) (1%) D4 (4dp, 1%) DS (4dp, 1%) Q1 Type your answer here

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