a. What is the estimated value of Pacific Healthcare stock on December 31, 2013? b. Is the stock under- or over-priced? c. If investors estimate that Pacific Healthcare will grow about 10 percent per year for the next five years (2014-18), what constant growth rate (2019+) are they using to actually price the stock? (Hint: what constant growth rate (2019+) produces an actual December 31, 2013 stock price of $8?)

Year Historical 2008 2009 2010 2011 2012 2013 Dividends per Share $0.215 $0.324 $0.353 $0.362 $0.391 $0.480 EXHIBIT 15.1 Pacific Healthcare: Historical and Forecast Dividends per Share Forecast 2014 2015 2016 2017 2018 2019 2020 $0.528 $0.581 $0.639 $0.703 $0.773 $0.804 $0.836