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1 . a public company is expected to pay out 1 0 % of its earnings per share as dividends over the next 3 years.

1. a public company is expected to pay out 10% of its earnings per share as dividends over the next 3 years. The other 90% of the earnings will be invested in opening new locations of its chain restaurant. Due to this growth, you expect the company's EPS to be $5.00, $7.00, $12.00 and $15.00 in the next four years. After 4 years, you expect the company to slow down expansion and thus begin paying out 90% of earning as dividends. The remaining 10% will be invested in opening stores that earn a 12% return. Thus, the company's EPS will grow at a rate of 1.2%. Investors in tech stocks as risky as this companys expect to earn a 10% rate of return.
a. What do you expect the price of the company's stock to be 3 years from today?
b. What dividends will be paid over the next 3 years?
c. What do you expect the price of the company's stock to be today?

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