Consider NewPharma Inc., a pharmaceutical company, which recently received approval for the production and marketing of its anti-Covid tablets, which is why today NewPharma is planning to invest in the production of these tablets. It is known that today its earnings per share (EPS) was $ 1.60, and that it has paid dividends at the end of each year, which will continue in the following years.

NewPharma plans to pay only 20% of its annual profits in dividends over the next 3 years to generate rapid profit growth of 35% per year, and then pay 50% of its annual profits for the following years when it is expected that the sea growth 10% annually. Assume that NewPharma investors require an effective annual return of 16%.

a) Calculate the share price today (t = 0).

b) Some analysts estimate that NewPharma's share price will reach $ 70 in 10 years (t = 10). To do this, they assumed that NewPharma's earnings per share growth in the first 3 years will remain at 35% per year and stabilize at 15% per year after the third year. If the dividend payment rate will remain constant at 20% for all years, then what is the assumption that analysts made about the annual effective return required by investors?