FIN 3200, Compute DPS with income statement, finacial models and finaciak graphg.

Corporate banking analysts at Midwest are trying to value Humana Inc. following the enactment of Affordable Care Act. As of December 2007 (today), Sales per share of $20, Operating margin of 40% (fixed), Interest Expense is 10% of Sales, tax rate is 21% and Dividend payout ratio is 30%. In particular, Humana's annual DPS is expected to increase by 15% in 2008, followed by 10% growth for four years (over 2009 and 2012). However, following the full implementation and effect of Affordable Care Act, Humana is expected to increase its DPS and EPS only by 7\% (e.g. health insurance exchanges). In particular, after 2012, corporate banking analysts are forcasting Humana's long-term growth nate to lincarly transition from 10% down to 7% in three years and long-term growth rate is then expected to be fixed at 7%. Midwest estimates 1.8 for Humana's beta, risk-free rate equals 1% with equity risk-premium of 5%. Please compute the fair DPS based value of Humana Inc. in 2007 for Midwest corponate banking analysts based on these estimates. (You need to show your income statement, financial graph, financial models and work to get full credit)