An electric car startup company will sell its stocks to investors. To value the stock, the CFO of the startup company is trying to use various methods.

Table 1

Company	Forecasted EPS	Book value
Startup	5	30

Table 2

Comparable	P/E	P/B	Growth rate
GM	50	3.3	3.0%
Ford	27	3.5	2.5%
Toyota	32	3.6	3.8%
Tesla	25	3.1	5.0%
BMW	20	5.5	4.0%

1. Given the information above of similar automobile companies calculate the stock price of the electric car startup company.

2. The CFO gathers more information from the finance manager. The opportunity cost of capital for similar companies is 8%. The finance manager predicts dividend paid out next year will be $3.5 and will be growing indefinitely. If we assume the average growth rate of the similar companies plus 3% is a good proxy for the company growth rate, what is the stock price?

3. The CEO thinks that the high dividend growth rate cant continue indefinitely. The CEO thinks it is better to assume two stages of growth for dividend payout. This years dividend payout was $3. She expects its dividend to grow at 15% per year for the next two years and then 3% per year thereafter. If the required rate of return in the stock is 8%, calculate the current value of the stock.