6) Company XYZ has a book value (equity) of $10 per share at end of 2018 and made $1.00 EPS (earnings per share). The company also paid a dividend of .30 per share in 2018. The stock has a beta of 1.1. The stock market return in 2018 was 9% and risk free rate was 3%.

a) Calculate return on equity (ROE) for XYZ last year;

b. Whats the stocks expected return (discount rate) under CAPM?

c. Calculate the companys sustainable growth rate?

d) Assuming at the sustainable growth rate, whats the stock value under constant growth DDM?

e) What's the residual income per share created by the company in 2018?

f) Whats the stock value per share under Residual Income Model (RIM)?