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17 The following data apply to the next three questions. You have been asked to estimate the growth rates and P/E ratio for Kids Soft,

17
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The following data apply to the next three questions. You have been asked to estimate the growth rates and P/E ratio for Kids Soft, a software firm that has the following characteristics: Beta 1.5 5% 6.5% 28.5714% 8.3333% Risk free rate = Treasury bond rate Market Risk Premium (MRP) Return on Equity (ROE) in first 5 years Return on Equity (ROE) after 5 years Beta Dividend payout ratio in first 5 years Dividend payout ratio after 5 years 1.3 30% 40% 17 of 40 What is your estimate to the expected growth rate after 5 years? O A. 3% OB. 4% O C. 8% OD 10% E. None of the above Unsure

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