Q1. Company A has projected net income per share for this year at $2.00 per share. It has traditionally paid out a dividend of 30% of its net income. Income and dividends have been growing at a rate of 5% per year. The equity discount rate for comparable companies is 10%. a) What is the projected dividend for next year? D = b) What is the current value of the stock using the Constant Growth Model of the Dividend Discount Model? Q2. If from Question 1, having that projected EPS of $2.00, Company A decides to reduce its dividend rate to 25%, and expects that the growth rate will increase as a result of the higher retained earnings to 8% per year: a) What is the new projected dividend for next year? Dinew b) What is the new stock value? Onew = Q3. A separate company, Company B, has a ROE of 12%. a) What will be its estimated growth rate if it has a dividend payout ratio of 45%? g= b) If the company decreases the dividend payout ratio to 35%, what will be the new estimated growth rate? new = Q4. A separate third company, Company C, will have earnings per share of $4.00 this year. It pays a dividend equal to 40% of net income. It is expecting that income and dividends will grow by 25% next year and 20% the year after. In subsequent years, it is expecting to return to its historical growth rate of 10% per year. The relevant discount rate is 15%. a) What are the projected level of dividends for years 1, 2 and 3. D = D = D = b) What is the value of the stock in year 2? P = c) What is the value of the stock today? [assume dividend D, has been paid out]. Q5. Company D has EBITDA of $400 million. It has outstanding debt of $700 million. Its industry has typically displayed a Value/EBITDA ratio of between 6x and 8x EBITDA. If Company D has 100 million shares outstanding, what is the estimate of the per share value of this company