Need help with Prob. 29: "Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model."

Required return = 12.55%

Retention Ratio = 0.592

Sustainable Growth Rate = 5.624%

Beta = 1.40

Risk-free Rate = 2.75%

Market Risk Premium = 7%

For Problem 28, EPS = 5.674

Vanuation estimates for the firm. Assume the values provided are from year-end 2013. A e firm's equity beta is 1.40, the risk-free rate is 2.75 percent, and the market risk premium is 7 percent. Dividends per share Return on equity Book value per share $ 2.04 9.50% $17.05 Earnings Cash Flow Sales $5.00 2015 value per share Average price multiple Forecasted growth rate 13.10 13.48% $6.60 9.42 11.41% $25.65 2.36 7.34% 27. Constant Perpetual Growth Model (L01, CFA6) What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model. 28. Price Ratios (L04, CFA8) Using the P/E, P/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties. 29. Residual Income Model (LO3, CFA9) Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model. 30. Clean Surplus Dividend (LO3, CFA9) Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 29? Why or why not? 31. Stock Valuation (LO1, LO3, L04) Given your answers in Problems 27-30, do you feel Beagle Beauties is overvalued or undervalued at its current price of around $82? At what price do you feel the stock should sell? 32. Residual Income Model and Nonconstant Growth (LO3, CFA9) When a stock is going through a period of nonconstant growth for 7 periods, followed by constant growth forever, the residual income model can be modified as follows: P = EPS + B1-B, (1 + i) P. (1+k) where EPS (1 +g) B, xk P = Bt. K-8 Al's Infrared Sandwich Company had a book value of $12.95 at the beginning of the year, and the earnings per share for the past year were $3.41. Molly Miller, a research analyst at Miller, Moore & Associates, estimates that the book value and earnings per share will grow at 120