2.11 On July 26, 2002, AOL-Time Warner stock closed at $10.90, had a next-year consensus earnings estimate of $0.99 per share, forward P/E = 11, and 18.5% annual nominal earnings growth expected for the next 5 years. Assume that AOL-Time Warner’s annual growth was expected to decrease to 10% during the following 5 years and then settle down to the average long-term growth of 4%. AOL-Time Warner’s 5-year growth consensus was about 1.5% higher than the long-term nominal growth of earnings forecasted at that time for the S&P 500 as a whole. In addition, assume that after 10 years AOL-Time Warner was expected to start a 51% dividend payout. Value AOL-Time Warner share by discounting future dividends. Assume a cost of equity of 12%. Interpret your results.