Qantas has experienced significant changes in the past few years. Its earnings per share increased from -128 cents in 2014 to 46 cents in 2017, and its share price also grew from about $1 in 2014 to over $5 in 2017.

Required:

1. Use the abnormal earnings model to provide THREE possible reasons for the increase in Qantas share price.
   2. Assume that at the end of 2018, Qantas reported in its annual reports that its book value of equity was $200. An analyst forecasts that Qantas will have a ROE of 12%, a cost of equity of 10%, and dividend payout ratio of 50% for the future years. Also assume the clean surplus condition holds. Based on these assumptions:
      1. forecast Qantas dividends and use the discount dividend model to estimate its fundamental value; and
      2. forecast Qantas abnormal earning for the next three years and use the discount abnormal earnings model to estimate its fundamental value.