The Wall Street Journal reported the price earnings (PE) ratio for XYZ stock to be 52. The annual dividends paid by the company were listed to be 0.92 and the closing price was listed to be US$31.625.

a. What were the earnings per share for XYZ company during the past year? (2 marks)

b. What is the dividend payout ratio for XYZ company? (3 marks)

c. The beta value for XYZ company is 1.2. The long term expectation of the risk-free rate is 6.5% per year and that of the market is 13% per year. Estimate the required rate of return for the XYZ. (4 marks)

d. Assuming that the market believes that XYZ is a steady growth company, estimate the appropriate value of the rate of growth in dividends that would justify such as high PE ratio for XYZ? (6 marks)