Use the following data to calculate your stock value. Assume you use the sustainable growth rate for the next 3 years. Then you believe it will drop to constant growth rate of 7% per year indefinitely.

• Note the following:

• ROE = NI / Total equity
• Payout ratio = total cash dividends / NI
• Recent total dividend payments were $26.25Million
• There are 10million shares outstanding.
• T-bill rate is 3.0%, S&P500 mkt return was 10.00%, and beta of this company is 1.2.

Balance sheet (in millions)
Current Assets	450		Current liabilities	200
Fixed Asset	500		Fixed Debt	250
			Total equity	500
Total Asset	950		Total liabilities+equity	950

Income Statement (in millions)
Revenue	500
all expenses	-100
EBIT	400
Interest expens	-100
EBT	300
Tax (0.30)	90
NI =	210

Question #1. What should be the stock value per share?

You believe your prior calculation with two stage growth rates are not accurate enough to reflect the true value of the stock. Hence, you decide to use more growth rates for calculation. You will still use the sustainable growth rate for the first 3 years. But you believe you should use 20% for year 4, 10% for year 5 and 6, and then you believe it will drop to constant growth rate of 7% per year indefinitely from year 7.

Question #2. With this new adjustment, what should be the stock value per share?