3:Farscape Corporation is expected to pay a dividend of 0.50 per share in the upcoming year (the company has issued 2 million shares). Dividends are expected to grow at the rate of 6% per year. The risk-free rate of return is 5% and the expected return on the market portfolio is 15%. The stock of Farscape Corporation has a beta of 0.5. The companys accountant also estimates that with further investment, the future cash flows of the company are to be as follows:

Year 0	Year 1	Year 2	Year 3	Years 4 16
4.4 mil	4.6 mil	4.9 mil	5.0 mil	5.4 mil p.a

Required

( i ) Calculate the return Farscape can expect from its stocks.

( ii ) Determine the value of a share in Farscape using the Dividend Discount Model.

( iii ) Determine the value of a share in Farscape using the discounted cash flow method.

( iv ) If the industry average P/E ratio is 11, what should the value of a share of Farscape be, if its earnings figure is 3.6 millions?

(v) Explain why the values in (ii), (iii) and (iv) differ.