Compnay Q's current ROE...

Company Q's current return on equity ROE is 16%. The firm pays out 60 percent of its earings as cash dividends payout ratio- 60 Current book value per share is $57. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to .70. The cost of capital is 12.5%. a. What are Q's EPS and dividends in years 1, 2, 3,4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year EPS $ 11.41 S 12.14 S12.91 $13.74 S 14.17 Dividends $6.85 8 $ 7,28 $7.75 0 $ 8.24 8 $20.62 b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock worth per share $40.75