Exercice 1 Share price 500 EUR EPS 33.3 EUR Payout ratio 25% Projected EPS growth 15% Date 0 1 2 3 3 Schedule of cash flow! -500.00 9.57 11.01 12.66 665.46 Discount rate 12% Discounted xash flows -500.00 8.55 8.78 9.01 473.66 NPV 0 Value of share (year 665.46 3) Net EPS (year 3) 50.65 P/E ratio (year 3) 13.14 1/You buy a stock which has the following features: price: 500 EPS: 33.3 payout ratio: 25% projected EPS growth 15% What will EPS have to be equal to in year 3 for you to get a 12% return on your invest- ment? What will the share be worth then?