The following information is used for the next TWO questions. Jurassic Bark is a rapidly-growing puppysitting service for "long-term" clients. After a recent success with a trial client, Seymour, the firm believes itself ready for rapid expansion, replying on reinvestment of much of the firm's profits in order to fuel growth. The firm returns some cash flows to shareholders through both dividend payouts and share repurchases, which will both increase as growth opportunities gradually disappear. You have the following financial information: Earnings in the most recently concluded fiscal year were $212.00 million. The company will retain all its earnings this year (from t=0 to t=1), reinvesting in new projects with a return on new investment of 43.4%. The next year (from t=1 to t=2), the company will retain 81.7% of its earnings. Of the money not being retained, the firm will return $38.39 million to shareholders through share repurchases i.e. at t=1). Return on new investment is expected to be 37.1%. In the following year from t=2 to t=3), the company will retain 57.3% of its earnings with an expected return on new investment of 29.6%. The firm will pay out $76.12 million of cash through share repurchases at t=2. The company will then retain 40.9% of its earnings in perpetuity. The firm will pay out $109.53 million through share repurchases at t=3. There firm has 125.00 million ordinary shares outstanding today. Question 22 Which of the following is closest to the expected dividends that Jurassic Bark will pay out 3 years from now i.e. at t=3)? a. $285.60 million b. $273.84 million c. $93.04 million d. $164.31 million e. $170.03 million Question 23 Jurassic Bark's common stock currently trades at $7.34 per share, and you esti- mate the cost of equity to be 28.0%. Which of the following is closest to what the market believes the return on new investment will be for Jurassic Bark when it reaches its stable growth perpetuity phase? a. 29.60% b. 26.19% c. 27.01% d. 14.53% e. 15.41% The following information is used for the next TWO questions. Jurassic Bark is a rapidly-growing puppysitting service for "long-term" clients. After a recent success with a trial client, Seymour, the firm believes itself ready for rapid expansion, replying on reinvestment of much of the firm's profits in order to fuel growth. The firm returns some cash flows to shareholders through both dividend payouts and share repurchases, which will both increase as growth opportunities gradually disappear. You have the following financial information: Earnings in the most recently concluded fiscal year were $212.00 million. The company will retain all its earnings this year (from t=0 to t=1), reinvesting in new projects with a return on new investment of 43.4%. The next year (from t=1 to t=2), the company will retain 81.7% of its earnings. Of the money not being retained, the firm will return $38.39 million to shareholders through share repurchases i.e. at t=1). Return on new investment is expected to be 37.1%. In the following year from t=2 to t=3), the company will retain 57.3% of its earnings with an expected return on new investment of 29.6%. The firm will pay out $76.12 million of cash through share repurchases at t=2. The company will then retain 40.9% of its earnings in perpetuity. The firm will pay out $109.53 million through share repurchases at t=3. There firm has 125.00 million ordinary shares outstanding today. Question 22 Which of the following is closest to the expected dividends that Jurassic Bark will pay out 3 years from now i.e. at t=3)? a. $285.60 million b. $273.84 million c. $93.04 million d. $164.31 million e. $170.03 million Question 23 Jurassic Bark's common stock currently trades at $7.34 per share, and you esti- mate the cost of equity to be 28.0%. Which of the following is closest to what the market believes the return on new investment will be for Jurassic Bark when it reaches its stable growth perpetuity phase? a. 29.60% b. 26.19% c. 27.01% d. 14.53% e. 15.41%