ABC Company just paid an annual dividend of $2 a share last year. Due to the high growth in business, its dividends are expected to grow by 8% for the next 3 years. From year 4, the dividends will grow constantly at the sustainable growth rate. The company follows a constant dividend payout ratio of 60%. The company has net profit margin of 15%, asset turnover of 0.8 and equity multiplier of 1.2. The required rate of return is 11%

. a. Calculate Return on Equity (ROE) and retention ratio. (4 marks)

b. Calculate the sustainable growth rate. (2 marks)

c. Calculate all dividends until the first year of constant growth stage. (4 marks)

d. Calculate the terminal value in the end of year 3. (2 marks)

e. Calculate the current intrinsic value of the stock. (2 marks)