ABC Corporation has a retention ratio of 40% of earnings which is expected to continue. Financial analysts predict that ABCs cash earnings per share next year will be $1.2 and the companys investments will earn an annual rate of return on equity investment of 12%. ABC pays their dividends annually. The market capitalization rate on ABCs equity is 10 per cent per annum. (this all the info that was given)

a. What is the payout ratio?

b. What is the value of a share in ABC?

c. What is the expected rate of growth rate of dividends?

d. What are dividends per share expected to be five years from now?

e. How much of the value of a share in ABC should be attributed to future productive growth potential arising from reinvestment of earnings?