Pm I." A Company current return on equity (RUE) is 14%- payout ratio = (15. Current book value per share is $513. Book value per share will grow as A reinvests earnings- Assume that the ROE and payout ratio stay constant for le next four years. After 1at, competition forces RUE down to 11.5% and payout ratio increases to (18. The cost of capital is 11.5%- a. 1|What are A's EPS and dividends next year? How will EPS and dividends grow in years 2, 3, 4:, 5 and subsequent years? Show your workings. b. 1|What is A's stock worth per share"? How does lat value depend on the payout ratio and growth rate after year 4? Show your workings- Pm 2: Under what conditions does 3", a stock's market capitalisation rate, equal its earningsprice ratio EPSIIPD'? PM 3