Below are earnings per share for Qantas Airways Limited. The required rate of return is 5.87%. The growth rate is forecasted at a constant rate of 2%. Number of share outstanding is 1,491.00.

Residual Earnings (RE) Valuation		2020	2021	2022	2023	2024
Comprehensive income to common		158	(1,141)	816	1,499	1,627
Beginning of period CSE		3,433	3,591	2,450	3,266	3,717

Required:

1. Calculate the value per share using the pro forma provided (10 marks)

2. In your opinion, how did the recent pandemic affect the valuation of the company?

(5 marks)

3. Calculate the implied growth rate in RE, if the current market price of the stock is $8.12. (5 marks)

4. In the context of investment decision-making, what are the advantages of using the reverse-engineering approach instead of computing the intrinsic value?

(5 marks)