1. Earnings per share for your company are $4. The earnings per share will grow 25% for the first year, 20% for the second, 10% for the third, and 5% thereafter. The company pays out a dividend at a 50% payout ratio. The beta is 2, the risk free rate is 4%, and the market risk premium is 5%.
   1. What is the expected divided for years 1-4?
   2. What is the cost of equity?
   3. What is the stock price valued using the dividend discount model?
   4. A comparable firms stock price is $140. Their trailing earnings per share are $8 and their forward earnings per share are $10. Based on valuation, what is the estimation for our stock price? What assumptions are made?