Assume today is the beginning of year 2011, i.e., January 1, 2011. Company ABC is a hi-tech start-up company that had total after tax earnings of $ 2 million in 2010. Of these, $500,000 were paid out as a dividend to shareholders on December 31, 2010, and the remaining dividends are invested to finance future growth. Company ABC has a total number of 1,000,000 shares outstanding so that the dividend per share is $0.5. ABCs earnings will grow at a rate of 50% per year in year 2011, 2012 and 2013. After that, the company will enter a more mature growth phase and grow at a constant rate of 8% per year forever. The cost of equity (the discount rate for dividends) of this firm is 15%. Company ABC will keep the payout ratio (payout ratio = dividend/ total after tax earnings) unchanged in year 2011 and 2012. After that, it will only retain 40% of after tax earnings for its future growth.

a)Value Company ABCs stock price at the beginning of year 2011.