Your PE firm is acquiring the company: ES.

Key statistics are subsequently detailed.

The stock of ES today (t = 0). ES is 100% equity financed. Its cost of capital (apply this to all cash flows) is 12.40% and the payout ratio is 78.00%. Expected earnings per share of ES at next year (t = 1) are $6.00. Assume that without new investments, expected earnings of ES would remain at their time-1 level in perpetuity. All future investments are expected to generate $0.20 in incremental earnings for each $1.00 of investment. For an investment made at time t, incremental cash flows are generated starting in year t + 1.

(a) Compute expected dividend per share of SDE next year (t = 1):

(b) Compute expected dividend per share of SDE two years from now (t = 2):

(c) What is the present value of growth opportunities (PVGO) of SDE today?