The managers at Jackson-Presley also believe that they are significantly undervalued, and want you to estimate how much the equity in the firm is truly worth. They provide you with the following additional information They believe that they can maintain 'high growth' for the next five years. The beta 1.08 is a good estimate of the beta for the next five years. The dividend payout ratio will be maintained at 25% for the high-growth period. The current (from the current income statement and balance sheet) return on capital, debt equity ratio and interest rate will be maintained for the high growth period. (The book value of equity at the beginning of the year was $ 100 million but the book value of debt is unchanged)

There are 12 million shares outstanding. After the high-growth period, the earnings growth rate is expected to drop to 6%, and the firm's return on capital will also drop to 15%. The debt equity ratio and interest rate are expected to remain unchanged. The beta is expected to be 1.00 in the stable growth period.

a. Estimate the expected growth rate in the high growth period. ( 2 points) b. Estimate the expected dividends in the high growth period. (1 point) c. Estimate the expected payout ratio in the stable growth phase. (2 points) d. Estimate the terminal price (at the end of the high-growth period) (2 points) e. Estimate the value today from the dividend discount model. (1 point)