Question 5 (Stock Valuation: 15 points) Samsung produces powerful handsets. Recently, the company paid a $1.25 dividend. Investors expect the dividends to grow constantly at 8% per year, and they require a 12% return on Samsung's shares. (a) What is Samsung's share price? (b) How would the share price change if investors believe that Samsung's long-term growth rate would be 7% rather than 8%? 2 (c) If Samsung would expand its business to the semi-conductor industry, the investors would change their expectation accordingly. The expected growth rate of dividends would be 10%, but the required rate of return would increase as well, to 15%. What is the new share price for Samsung? Comparing with your answers in part (a), please also provide your judgment whether Samsung should step into the semi-conductor industry