Exercise: Stock Valuation Instructions: You are allowed to work in groups of 2-4 students, but you must submit the exercise individually on iLearn before the due date. Please include group member names. You must show your work and complete all parts of the problem to receive credit. Solutions will be posted on iLearn after the due date. Problem: The Stockton company projects earnings per share at the end of the year to be $5. The discount rate is 10% a) Without further investment, the firm forecasts level earnings per share (EPS) of $5 in perpetuity. Calculate the price of a share of stock under the assumption that the firm pays out all earnings as dividends (i.e. plowback=0%). b) Alternatively, the firm is considering a plowback ratio of either 30% or 60%. If the firm's ROE is 15%, calculate the dividend growth rate, the price per share and the PVGO under each payout policy: i) plowback =30%, ii) plowback =60% c) Assume instead that ROE is 5%. Calculate the growth rate, stock price and PVGO under the two plowback scenarios: i) plowback=30%, ii) plowback =60% Note: Round your calculations to two decimals