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1. (10 points) Atlas Home Supply maintains a constant dividend payout ratio at 60% of its annual earnings. Its earnings per share in past year

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1. (10 points) Atlas Home Supply maintains a constant dividend payout ratio at 60% of its annual earnings. Its earnings per share in past year was $6. Its return on equity in coming three years will be 20%. After three years, its return on equity will decline to 10% forever. The required rate of return on this stock is 15% per year. 1) What is your estimated stock price of Atlas Home Supply now? 2) If you buy 1,000 shares of this stock now and hold it until the end of year 3, what will be your capital gain in dollar value

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