5. The Empire Company has just reported $4 earnings per share. The company stock beta is 1.50 and Return on Equity is 20%. Assume a 3% risk free rate and 6% market risk premium. Management considers three options. A- Permanent dividend payout of 75%; B-National expansion that will require 25% dividend payout for four years and return to 75% permanent dividend payout after that; C; Worldwide expansion, that will require zero dividend payout for eight years, and return to 75% permanent dividend payout after that. Calculate the stock price under the three options. 6. Super Tech most recent EPS was $2. It return on equity is 30%. The company will not pay any dividend for 14 years. After 14 year in the 15th year it will payout 80%, and maintain that payout indefinitely. The stock beta is 2.0 , the risk-free rate is 4% and the market risk premium is 8% a. Calculate the stock price and the PE ratio. b. An analyst suspects the firm ran out of large growth opportunities and will start its 80% payout ratio immediately. Calculate the resulting stock price and the PE ratio