You are valuing the common stock of QRS, Inc. Comparable firms in the same industry have an average P/E = 12.

Comparable firms also have an average dividend yield = 3.5%. QRS's forward EPS = $5.01, and QRS pays 60% of EPS out as dividends. QRS expects EPS and dividends to grow at 1% forever.

1. What is the stock value using the average P/E ratio as a multiplier?
2. Using the average dividend yield as a multiplier, what is the stock value?
3. Use the dividend discount model and required return k = 6% to estimate the value of one share of QRScommon stock.
4. Assume ORS's forward dividend yield = the industry average. Use the dividend discount model to compute the required return to QRS stock. Hint, solve the dividend discount model equation for k.