Innovative Group Ltd, an IT company, is undertaking a new project to develop software for Fair Supermarkets. As such, it is expected that the company has an ROE of 24% and a plowback ratio of 0.30. The forecasted earnings of the company for the first year from now are $2 per share. Investors expect a 12% rate of return on the companys stock. (need full process)

a. Calculate the price at which this companys stock should sell using the constant-growth dividend discount model.

b. Calculate the present value of growth opportunities for this company.

c. If this company plans to reinvest only 20% of its earnings, will dropping the reinvestment rate from 30% to 20% be a good decision for the company? Why?

Your valuation in part (a) is based on the new project undertaken by the company to develop software for Fair Supermarkets. However, recent developments have informed you that the company will not be able to continue to do this project for Fair Supermarkets. Based on this new information you have revised your estimates regarding the companys prospect and forecasted that the companys dividend is $0.50 per share for the first year from now and $1.00 per share for the second and third years from now. After that the companys dividend will grow at a constant rate of 6% per annum permanently.

d. What is the price at which this companys stock should sell based on these new inputs according to the two-stage dividend