Stock A pays a dividend of $3 per share in year zero. In year 1, the dividend is $3.3 per share,. The dividend growth rate is constant and the return on equity is 25%.

1. What is earnings per share in year 0 ?

A) $6

B) $5

C) $4

D) $ 3

E) None of the above

2. What is earnings per share in year 1 ?

A) $6.0

B) $5.5

C) $4.5

D) $ 5.0

E) None of the above

3. What is earnings per share in year 2 ?

A) $6.05

B) $5.65

C) $4.75

D) $ 3.85

E) None of the above

4. What is the dividend per share in year 2 ?

A) $3.55

B) $3.63

C) $3.30

D) $3.75

E) None of the above

5. What is the payout ratio at year 1 ?

A) 0.5

B) 0.4

C) 0.6

D) 0.3

E) None of the above

6. What is the payout ratio at year 3 ?

A) 0.5

B) 0.4

C) 0.6

D) 0.3

E) None of the above

7. What is the plowback ratio at year 1 ?

A) 0.5

B) 0.4

C) 0.6

D) 0.3

E) None of the above

8. What is the plowback ratio at year 6 ?

A) 0.5

B) 0.4

C) 0.6

D) 0.3

E) None of the above

9. What is the book value of equity per share in the beginning of year 1 ?

A) $25

B) $24

C) $23

D) $22

E) None of the above

10. What is the book value of equity per share in the beginning of year 5 ?

A) $33

B) $32

C) $31

D) $29

E) None of the above