c$)$ From your table, explain the relationship between the rate of growth of dividends and

growth rate of earnings. When are they equal to each other?

d$)$ You plan to sell the share in $3$ years. Which price do you expect to see in the market then?

e$)$ Suppose that all re$-$investments for the past year have already been made and cannot be

changed. What the proportion of the share price attributed to the Value of Growth

Opportunities?

f$)$ Suppose the management finds out that in fact the company's ROE will be lower. It will

decline linearly to $10\%$ in the $4^{th}$ year and will remain $10\%$ forever afterwards. If the

company maintains the initially planned payout policy, what will happen to the share price?

Compute the absolute change.

g$)$ Do you agree with the statement? Why?

$"$If the company's ROE is permanently less than the required rate of return, the optimal

payout policy for the company will be to pay all Earnings as Dividends"