Company XYZ is considering going public and is trying to determine its value based on its future dividend payments. Their current EPS is $19.00, and over the next 6 years they anticipate a payout ratio of 15% and ROE of 15%. During this high-growth period, their beta is estimated at 1.15, with a risk-free rate of 1.0% and a market risk premium of 3%. At the end of the 6-year high growth period, they estimate their stable beta will be 1.00, with ROE of 13% and growth of 2.0%. (Risk-free rate and market risk premium will remain the same.) Using this information, determine the per-share value for the company.

Two Stage Div Discount Given Inputs

Years in Stage 1

Current EPS

Payout Ratio (P/O)

Return on Equity

High Growth Beta

Stable ROE

Stable Growth

Stable Beta

Risk Free Rate

Market Risk Prem

Calculated Inputs

High Growth Rate

Stable P/O Ratio

Cost of Eq - High

Cost of Eq - Stable