Question 1 As a chartered financial analyst (CFA), you assume that Solar Optical Enterprises (SOE) will have earnings per share of $2 for the coming year. SOE plans to retain all of its earnings for the next three years For the subsequent two years, the company plans on retaining 50% of its earnings It will retain only 25% of its earnings thereafter. Retained earnings will be invested in projects with an expected return of 20% per year You have also collected the following information for analysis Current stock price Beta Risk free rate of return Expected rate of return on market index 10.5% Weighted average cost of capital S36.5 1.2 3.0% 9% Required Prepare a table of SOE's earnings and dividends for the subsequent vears and determine the intrinsic value of SOE using the dividend discount model (DDM). Explain your recommendation to your clients based on your estimation. (30 marks)