2017 6.37 2016 5.08 Activity 1 Here we present selected financial information for S. company. 2020 2019 2018 Earnings per 7.45 6.74 8.85 share, EPS Dividend per 3.7 3.6 3.5 share, DPS Payout ratio 50% 53% 40% Return on 15.6% 15.9% 22.3% equity, ROE Share price 119.2 104.2 79.94 3.3 3.0 52% 18.2% 59% 14.6% 94.37 89.06 The analyst estimates that the required rate of return of S. company is 7.5%. 1. Justify why the analyst estimates the growth rate to be approximately 5.4% based on the dividend growth. 2. Using the Gordon-Shapiro model, estimate S.'s intrinsic value 3. How much does the dividend growth assumption add to the intrinsic value estimate? 4. Based on the estimated intrinsic value, is a share of Siemens undervalued, overvalued or fairly valued